KakaoCorp., the South Korean internet giant behind the country's dominant mobile messaging app, announced Friday that its board of directors has approved a corporate spin-off to realign its focus on artificial intelligence.

The pro-rata spin-off will result in two separate companies: Kakao AI will be established as a new entity, while the surviving entity will be renamed Kakao X. The split ratio, based on net asset value, is set at 0.36 for Kakao AI and 0.64 for Kakao X.

"This spin-off is designed to equip Kakao with the execution speed and capital allocation system required for the AI era by separating businesses that have different characteristics and are at different stages of growth," Kakao wrote in its announcement.

Kakao added that in the past two years, it has streamlined its governance around core businesses by divesting non-core operations and significantly reducing the number of affiliates. Kakao dubbed the spin-off as a "full-fledged starting point" for its growth in the AI era.

Agentic AI interface

Kakao AI will focus on developing KakaoTalk, the chatting app with over 55 million global users, into an "agentic AI interface" that connects users to a personalized platform covering search, recommendation, purchase, and settlement of goods and services. The entity will also handle Kakao's existing advertising and commerce businesses.

Current Kakao CEO Chung Shin-a will lead Kakao AI with an aim to draw more than 20 million daily active AI users by the end of this decade. It also aims to have its average annual revenue grow 20% to more than six trillion won ($4.34 billion) by 2030.

Meanwhile, Kakao X is presented as a "future-value investment company" that will manage its fintech subsidiaries, entertainment, and mobility affiliates. It seeks to make new investments in digital assets, physical AI, and global entertainment fandom.

The company plans to use approximately 2.3 trillion won ($1.65 billion) raised through asset monetization and about 4.1 trillion won ($2.95 billion) in subsidiary investment capacity to make such investments. It has set a target of more than 10 trillion won ($7.2 billion) in revenue by 2030, with average annual growth of 13.3%.

The company plans to complete the split on Jan. 1, 2027, following a special shareholders’ meeting scheduled in December. Kakao AI is expected to relist, and Kakao X is expected to change its listing on Jan. 27, 2027. The timeline remains subject to regulatory approvals.

Kakao Corp. (KRX: 035720) dropped 7.5% on Friday, closing at 35,800 won ($25.86).