Kakao Mobility grapples with staff jitters of potential sell-off

Kakao Mobility CEO Ryu Geung-seon / Courtesy of Kakao Mobility

Almost half Kakao Mobility employees join labor union this week

By Park Jae-hyuk

Kakao Mobility CEO Ryu Geung-seon held a meeting Friday with employees who are concerned about the possibility of the company's largest shareholder, Kakao, selling around 40 percent of its 57.5 percent stake in the subsidiary to a private equity firm.

Ryu is said to have held the meeting to reassure employees by explaining the company's current situation and its plans. Kakao Mobility did not disclose what he said, although a spokesperson confirmed that the meeting was held on Friday afternoon.

The meeting took place three days after Ryu sent a message to Kakao Mobility employees that even if its shareholder structure changes, it will not infringe on their rights. As his message did not rule out the possibility of the sell-off, fears have grown further among the employees.

In addition, Kakao has not denied the news that it is in talks with MBK Partners to sell its stake in Kakao Mobility, although both sides have not confirmed the rumor.

“For the improvement in Kakao's shareholder value and Kakao Mobility's continuous growth, we are considering various measures, but nothings has been decided yet,” Kakao said in a regulatory filing, Wednesday.

The ambiguous stance has prompted almost half the employees at Kakao Mobility to join the union.

Among around 700 Kakao Mobility employees, around 300 decided this week to join Crew Union, a group of unionized workers of Kakao and its affiliates, according to industry officials. Before rumors of a sell-off spread, the number of Kakao Mobility's unionized workers stood at only around 70.

Their latest decision has been widely interpreted as part of efforts to gain the upper hand in a potential negotiation with the new owner of their company. The workers are expected to ask for job security and compensation for the sell-off.

Seo Seung-wook, the leader of Crew Union, was unavailable for comment on Friday afternoon.

Industry officials have speculated that growing uncertainties about Kakao Mobility's initial public offering (IPO) forced Kakao to unload its mobility subsidiary.

According to the officials, Kakao has to compensate its foreign shareholders, including U.S. investment firm TPG, unless it fulfills its promise to list Kakao Mobility on the stock market by the end of this year.

Last August, Kakao Mobility kicked off an IPO process, sending a request for proposal to securities firms here and abroad to select underwriters. However, it abruptly delayed the process last September, amid growing concerns over the government's intensifying regulations on Kakao's overall businesses at that time.

Kakao Mobility hired Credit Suisse, Morgan Stanley, Citigroup, Korea Investment & Securities and Daishin Securities as underwriters in March, raising the possibility of the IPO process getting back on track. But bearish market conditions have made it difficult for Kakao to make a significant profit from the listing of Kakao Mobility. During the first six months of this year, at least six companies dropped their plans to go public.

The intensifying regulations on Kakao Mobility's business after its conflict with taxi drivers are also mentioned as possible reasons for Kakao's decision to sell its stake in Kakao Mobility.