Value context and insight. lkm@koreatimes.co.kr
Kakao's overseas expansion drive falters again
Kakao Mobility CEO Ryu Geung-sun is surrounded by reporters in the lobby of an office building in southern Seoul, Nov. 13. Yonhap
By Lee Kyung-min
The overseas growth drive of Kakao Corp. is sputtering, hindered by repeated failures of its subsidiaries to ink acquisition deals with industry leaders in the U.S. and Europe, according to market watchers, Wednesday.
Chief among the risk factors are legal uncertainties over management, as illustrated by ongoing trials of Kakao Chief Investment Officer Bae Jae-hyun on stock manipulation charges. Kakao founder Kim Beom-su and former CEO Hong Eun-taek face prosecution, and Kakao Mobility CEO Ryu Geung-sun was questioned by the Financial Supervisory Service for accounting fraud suspicions.
The local IT titan will likely face calls to revise its vision of "Beyond Korea" seeking to have the overseas business account for more than 30 percent of the firm's total revenues by 2025, up from the current 20 percent.
Kakao Mobility-FreeNow project ends in vain
Months of due diligence by Kakao Mobility to acquire an 80 percent stake in FreeNow for up to 400 billion won ($308 million) essentially ended in vain.
FreeNow is the largest ride-hailing and taxi services platform in Europe. It has a combined market share of 83 percent in Europe. Services are available in 170 cities in 11 countries, including the U.K., France, Germany, Italy, Spain, Poland, Austria, Ireland and Greece.
Market watchers say the Kakao mobility subsidiary was unable to convince its European counterpart to consider a last-minute revision offer put forth by incoming Kakao CEO Chung Shin-a.
The new CEO set to helm Kakao Corp. next year concluded last month the project will have the best chance only if select cities and countries with high tourist demand take part in the acquisition. Cited popular destinations are the U.K., Spain, Italy and France.
A committee at Kakao reviewing the investment plan considered Chung's recommendation and shared a new proposal with FreeNow late last month. The European mobility platform has not responded.
“The deadline for the acquisition was early this month. More than three weeks have passed,” an industry official said.
The acquisition bid had little support from Kakao Mobility’s second-largest shareholder, Texas Pacific Group (TPG), an American private equity firm, according to industry sources.
Wednesday’s development follows a similar defeat last week.
Siebert Financial Corp. a New York Stock Exchange-listed investment consultancy, and Kakao Pay, the payment subsidiary of Kakao, terminated their previously announced stock purchase agreement, Dec. 20.
Kakao Pay signed a contract to acquire a 51-percent stake in Siebert for about 139.9 billion won in April. Of the total, only a 19.9 percent stake was acquired in May.
The second part of the transaction will not be completed because of Kakao management's legal risks, the U.S. brokerage said at the time.