Kakao retracts sale of mobility unit

The Korea Times

The Korea Times

Business

Mon, October 2, 2023 | 09:48

Companies

Kakao retracts sale of mobility unit

Posted : 2022-08-19 08:59

Updated : 2022-08-20 10:34

Unionized workers of Kakao Mobility hold a street rally in Gwanghwamun, Seoul, July 25. Korea Times file

By Lee Kyung-min

IT giant Kakao has withdrawn its plan to sell off over 10 percent of its stake in affiliate Kakao Mobility to a private equity fund (PEF), Thursday, defeated by a month-long protest by unionized workers at the affiliate. Kakao owns a majority stake in Kakao Mobility, the operator of the ride-hailing service app Kakao T.

The announcement made by the operator of Kakao Talk, the country's most popular messenger app, tanked its efforts long criticized by the unionized mobility affiliate workers as "an irresponsible tactic" to dodge accountability for a slew of failures in corporate performance.

Also dismissed is Kakao's characterization of the move as a much-needed breakthrough to reorganize its corporate portfolio and financials, to counter a sharp fall in the share prices of the firm and its key affiliates.

The shares took a dive, led by allegations of business overreach at the expense of the mobile affiliate's smaller market players. Kakao shares hit a 10-month low of 66,200 won ($50), July 4, down from a previous high of 110,000 won March 21. Shares of affiliate Kakao Bank plummeted to an all-time low of 28,600 won, July 1, down from the previous high of 53,600 won, March 17.

Kakao's Corporate Alignment Center (CAC), overseeing its subsidiaries, said in a statement that the firm has suspended plans to seek a change in the makeup of shareholders of the mobility affiliate.

"We respect the resolution reached between the management and unionized workers of Kakao Mobility in seeking mutual growth beneficial to both the firm and society," it said in the statement. "We will provide assistance as needed to realize the plan."

Thursday's announcement followed fierce collective action organized by unionized workers at the mobility affiliate over the past month.

They held a press conference July 11, decrying Kakao's plan to sell part of its 57.5 percent stake in the mobility affiliate to MBK Partners, a local PEF. Unionized workers held a street rally, July 25.

Kakao is, they maintain, essentially making a hefty short-term profit with total disregard for workers left vulnerable to pay cuts and layoffs.

"The sell-off plan means years of efforts put in by numerous mobility workers have gone to waste," they said.

lkm@koreatimes.co.kr