Kakao Sells Controlling Stake in Struggling Kakao Games to LY Corporation

Kakao has sold its controlling stake in its loss-making subsidiary, Kakao Games, to LINE Yahoo.

On March 25, Kakao Games announced that "LAAA Investment," a special purpose company funded by LINE Yahoo, would acquire a portion of Kakao Games shares from Kakao and participate in the subscription of new shares and convertible bonds to be issued by Kakao Games. Once the transaction is completed in May, LAAA Investment will become the largest shareholder of Kakao Games. Kakao, previously the largest shareholder, will step back to become the second largest shareholder.

Through this transaction, Kakao Games will secure KRW 300 billion in capital. A representative from Kakao Games stated, "Based on these funds, we will accelerate efforts to strengthen our global market competitiveness and establish a foundation for mid- to long-term growth. Kakao will also continue its partnership with Kakao Games by reinvesting part of the proceeds from the sale of existing shares into this transaction."

The company added, "In particular, we plan to expand our collaborative base with the new largest shareholder in major global markets, including Japan, and to gradually enhance our global business competitiveness by leveraging Kakao Games' development and service capabilities." In the course of this equity restructuring, Kakao Games has formalized the stability of employment for its executives and staff, as well as the succession of existing working conditions.

Kakao Games has posted losses for five consecutive quarters since the fourth quarter of 2024. Last year, its revenue was approximately KRW 465 billion, a 26% decrease year-on-year. The operating loss was about KRW 39.6 billion, turning into the red over the same period.

This content was produced with the assistance of AI translation services.