Kakao (035720.KS) can proceed as planned with its absorption of Kakao Investment, the first step in its spin-off plan, after shareholder opposition came in far below the level needed to derail the deal.
Shareholders holding just over 2% of Kakao's outstanding shares filed objections to the merger during a window that ran from the 7th to the 21st, according to information technology industry sources on the 22nd. Under South Korea's Commercial Act, a small-scale merger can be approved by a board resolution without a shareholder meeting, but the deal cannot proceed if holders of 20% or more of outstanding shares submit written objections within two weeks of the public notice.
The merger is the first stage of a plan to split Kakao into two companies, Kakao AI and Kakao X. Based on the book value of net assets, the split ratio disclosed by Kakao is 36.5% for Kakao AI and 63.5% for Kakao X.
Kakao's labor union and some shareholders had pushed back against the spin-off plan and urged investors to register their opposition to the merger. That raised concerns that objections could exceed the 20% threshold for halting a small-scale merger and disrupt the plan. The actual figure came in well below that level, clearing the way for the process to move ahead on schedule.
Kakao plans to hold a board meeting on Nov. 6 to approve the merger of Kakao X and Kakao Investment.
