Kakao Participates in 16.2 Billion Won AXZ Capital Increase... "Supporting Operating Funds During Sale Process"

Kakao Union Protests "Hasty Sale"

Kakao is finalizing the sale of its subsidiary AXZ, which operates the portal site Daum. Ahead of the sale, Kakao provided a final round of operating funds to AXZ, and the current AXZ CEO has announced his intention to resign after the signing of the main contract. The Kakao labor union is protesting, claiming that the sale was conducted in a hasty and careless manner.

According to the Financial Supervisory Service's electronic disclosure system on May 15, Kakao announced the previous day that it would participate in a paid-in capital increase of AXZ worth KRW 16.2 billion. Kakao explained that this capital contribution was intended to support AXZ's operating funds as it is being sold to Upstage. A Kakao representative stated, "The investment was made to provide operating funds needed during the transaction process, as well as to ensure stable business execution." Kakao also supported AXZ through paid-in capital increases in May last year and March this year, following AXZ's spin-off.

Yonhap News.

Upstage finalized the acquisition of AXZ on May 7. In January, the two companies signed a memorandum of understanding (MOU) for a share swap, under which Kakao would transfer its entire stake in AXZ to Upstage, and Kakao would acquire a certain stake in Upstage. After roughly four months of due diligence, the main contract was signed. Once all relevant procedures, such as the Korea Fair Trade Commission's business combination review, are completed, AXZ will become a subsidiary of Upstage.

With the sale to Upstage confirmed, AXZ CEO Yang Juil also announced his intention to step down. On the previous day, Yang conveyed his intention to resign to AXZ members through an open chat. Yang is expected to leave the company at the end of this month. He has overseen the operation of Daum since 2023, when AXZ operated as a content company-in-company (CIC) within Kakao. Kakao spun off the content CIC to establish a new company, Daum Preparation Corporation, in May last year, and rebranded it as AXZ in June.

Lee Geonsu, head of AI Search at Upstage, is being mentioned as a possible successor to Yang. Lee, who previously served as CEO of ConnectWave, joined Upstage this year. Until the first half of 2023, he led the Place (map) business at Naver. However, an Upstage representative said, "Nothing has been decided yet."

Following the confirmation of the sale to Upstage, the Kakao labor union began protesting, calling the sale hasty and careless. The Kakao branch of the Korean Federation of Chemical, Textile, Food and Service Workers' Unions issued a statement strongly condemning what it called a deceptive sale, and announced that it would begin collective action demanding the resignation of the irresponsible management and job security for employees.

The union criticized Yang's departure as a "deceptive exit," questioning whether the large stake he received during the spin-off was truly compensation for his responsibility in revitalizing the service, or just a "service fee" for pulling off the sale and leaving. "The sight of management abandoning the crew—those who dedicated themselves to the future of the company—while escaping alone represents the worst kind of irresponsibility Kakao's leadership could demonstrate," the union said.

The Kakao union pointed out that, when AXZ became an independent subsidiary, Kakao management had assured employees that a sale was not being considered, but then pushed through the sale just a few months later. The union is calling for the entire sale process to be nullified and made transparent, for management to be held accountable and to return any compensation, and for job security, while announcing plans for collective action.

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