Kakao to Cancel 5.15 Million Shares as Split Faces Trust Test

What Kakao’s Cancellation of 5.15 Million Shares Means

Kakao began buying back 5.15 million treasury shares on Nov. 6 and will cancel them all. According to Maeil Business Newspaper’s securities desk, the investment significance of the decision lies less in simply supporting the share price than in fulfilling a shareholder-return pledge ahead of schedule while the spin-off has been delayed. What has been confirmed so far is the start of the buyback process; what remains uncertain is how the cancellation will affect corporate value.

A share buyback and cancellation is a shareholder-return method in which a company purchases its own shares in the market and then retires them. Kakao plans to acquire shares equivalent to 1.16% of its outstanding stock, investing about 150 billion won from Nov. 6 through Feb. 5, 2027. The funds will come from a cash dividend received from Kakao Investment.

Why the 300 Billion Won Plan Was Split in Half

The original plan called for KakaoX to buy back and cancel 300 billion won worth of shares after completing the spin-off. After the spin-off was delayed, the structure was revised so that Kakao would deploy 150 billion won early and KakaoX would complete the remaining 150 billion won buyback after the split. The market’s focus has consequently shifted from the plan’s total value to the sequence and full completion of its execution.

The spin-off date was postponed from Jan. 1 to Feb. 1, 2027. The extraordinary shareholders’ meeting to approve the split was also pushed back from Dec. 17 to Jan. 15, 2027, while the listing change and relisting are scheduled for Feb. 25, 2027. Because the planned completion date for the share acquisition overlaps with the spin-off timetable, investors should separately verify that each step proceeds as planned.

Changes to KakaoAI’s Asset Allocation and Split Ratio

Shareholder returns are not the only element that changed. KakaoAI was allocated an additional 263.6 billion won in assets, and its net assets were revised from about 2.9 trillion won to about 3.2 trillion won. The split ratio between KakaoX and KakaoAI was also changed from approximately 0.635:0.365 to approximately 0.611:0.389.

The split ratio determines the economic interest allocated to each of the two companies after the separation. Investors who focus solely on the share cancellation could therefore overlook the revised asset allocation and split ratio. The key investment consideration is to assess the execution of shareholder returns and the governance restructuring separately rather than treating them as a single event.

Key Issues in Kakao’s Shareholder-Return Structure

• Early execution: Kakao began the process of acquiring about 150 billion won worth of treasury shares without waiting for the spin-off to be completed.
• Follow-up execution: KakaoX plans to complete the buyback and cancellation of the remaining 150 billion won worth of shares after the split.
• Return framework: KakaoX plans to use 30% of dividends from subsidiaries and investment gains, after taxes, to fund shareholder returns.
• Cash-flow condition: KakaoAI plans to return 20%–35% of its standalone adjusted free cash flow to shareholders, raising the ratio to as much as 40% if that cash flow increases by at least 50% from the previous year.

Related Stocks and Impact on Internet Platforms

• Kakao: If all acquired shares are canceled, they will cease to exist. This is a positive catalyst for shareholder returns, but the full plan cannot be considered completed until the final number of shares and acquisition amount are confirmed.
• KakaoX: KakaoX will be responsible for deploying the remaining 150 billion won after the spin-off. The original plan’s completion will become clearer if this follow-up buyback and cancellation is carried out.
• KakaoAI: KakaoAI is directly affected by the additional asset allocation and revised split ratio. Investors should monitor not only its shareholder-return ratio but also whether standalone adjusted free cash flow meets the stated conditions.

Share-Price Reaction and Investor Considerations

According to the Korea Exchange (KRX), Kakao shares were trading at 33,000 won as of 1:50 p.m. that day, up 800 won, or 2.48%, from the previous session. The short-term price move indicates that the market viewed the decision positively, but this reaction alone does not establish how the share price or corporate value will perform after the cancellation.

• The approximately 150 billion won figure was calculated using the Nov. 4 closing price of 29,100 won, so the number of shares acquired and the amount spent may vary depending on the actual purchase price.
• The final number of shares purchased and canceled will be disclosed separately, so investors should distinguish the actual result from the planned 5.15 million shares.
• Whether the spin-off and relisting procedures will ultimately be completed remains beyond what has currently been confirmed.

Future Disclosures Will Determine Kakao’s Revaluation

During the third-quarter earnings conference call the previous day, CEO Shina Chung said, “We take painfully seriously the criticism that the pace of adoption for Kakao’s AI services has fallen short of capital-market expectations.” She added that the gap had widened between the market’s current valuation and the future growth potential seen internally. The share buyback is a capital-allocation response to that gap, but it cannot substitute for actual progress in expanding AI services.

In an optimistic scenario, Kakao continues the acquisition process through Feb. 5, 2027, and KakaoX executes the remainder of the plan. Conversely, if the final number of shares falls short of the target or the spin-off timetable slips again, confidence in the shareholder-return pledge could be undermined. The next key checkpoints are the final buyback and cancellation disclosure, the extraordinary shareholders’ meeting on Jan. 15, 2027, the spin-off on Feb. 1, 2027, and the listing change and relisting procedures on Feb. 25, 2027.

This article was automatically summarized and analyzed based on the original news report. View Original Article (Maeil Business Newspaper Securities)