The National Chemical Fiber Food Industry Union Kakao Chapter (hereafter the Kakao union) said on the 11th it opposes Kakao's spin-off.
Earlier, Kakao announced a spin-off plan to split the company into "KakaoX," which handles investment and portfolio management, and "KakaoAI," which is in charge of services based on artificial intelligence (AI) technology.
The union noted the company's explanation was lacking on the need for the partitioning, the problems that cannot be solved under the existing structure, and who would bear the risks from the partitioning. It also argued that the company must go beyond declaring a principle of employment succession and guarantee concrete measures in writing. It said the company must clarify criteria for assigning employees to each corporation, whether wages, evaluations, benefits, and length of service will be maintained, and employment guarantees during future reorganizations. It also cited as a concern the job insecurity of affiliate workers that could arise during KakaoX's business restructuring.
The union also raised the possibility of damage to shareholder value. Kakao calculated the partitioning ratio based on net worth book value as KakaoAI 0.36 and KakaoX 0.64. Existing shareholders will receive shares in the two companies in proportion to their equity. The union's position is that even if shares are allotted proportionally, there is a risk of value decline due to future additional listings, capital increases, and transactions among affiliates, so the basis for calculating the partitioning value and the subsequent direction of business restructuring should be disclosed.
The union plans first to put the brakes on the merger-by-absorption process of Kakao Investment, which is underway with the goal of a merger date of Jan. 1 next year. It will ask members and small shareholders to join in expressing opposition, and, depending on management's response, will consider solidarity and joint action with small shareholders. Under the Commercial Act, if shareholders holding 20% or more of the total number of issued shares give notice of opposition, the merger cannot proceed as a small-scale merger that does not go through a general meeting of shareholders.
Seo Seung-uk, head of the Kakao Chapter, said, "The company must answer how it will protect jobs and shareholder value," and added, "Please actively participate in expressing opposition to the imminent small-scale merger."