Kakao axes plan to sell stake of Kakao Mobility after backlash from employees

Kakao called off its plan to sell a stake in Kakao Mobility, after facing strong opposition from employees.

A Kakao T taxi [YONHAP]

Kakao called off its plan to sell a stake in Kakao Mobility, after facing strong opposition from employees.

The decision was announced after the possibility of the sell-off was first reported by local media in June.

“Kakao Corporate Alignment Center decided to discontinue the review on making adjustments in the corporate ownership composition in deference to the proposal of Kakao Mobility’s consultative body,“ said Kakao in a statement Thursday.

Met with strong protests from the employees over the potential deal, Kakao Mobility CEO Ryu Gung-seon on June 25 asked Kakao, its majority shareholder, not to sell a stake in the transportation and taxi-hailing company.

On Aug. 1, a consultative body between Kakao Mobility employees and management was established to discuss the issue. The consultative body suggested a compromise proposal to Kakao Corporate Alignment Center on Tuesday, but did not disclose any details of the proposal.

The Corporate Alignment Center oversees the operation of Kakao subsidiaries.

Kakao, which owns 57.5 percent of Kakao Mobility, had been considering a sale of about 10 to 19 percent of the company to become the second-largest shareholder.

Kakao companies, including Kakao Mobility, came under fire last year for competing with small, independent stores or charging high commissions to service providers such as taxi drivers, leveraging market dominance. Kakao Mobility initially hoped to avoid criticism to some extent by distancing itself from the tech company, but decided against it due to the internal opposition from employees.

As the sell-off plan has been scrapped, Kakao Mobility aims to “practice corporate social responsibility” and “grow together with mobility partners and vulnerable groups for continuous innovation,” Kakao said.

“Kakao Mobility and Kakao Corporate Alignment Center will strive to solve the transportation problems based on sustainable innovation that society can agree with,” said Hong Eun-taek, Kakao co-CEO.

Kakao Mobility employees welcomed the announcement.

“The decision is a result of active participation of Kakao subsidiary employees,” said Seo Seung-wook, a representative of the unionized workers of Kakao in a statement Thursday. “As the labor union is the official bridge between Kakao Mobility’s employees and the management, we will actively cooperate with the company for Kakao Mobility’s growth in the future.”

Kakao Mobility employees had been up in arms since Ryu on June 17 admitted there had been a discussion on a possible sale during an internal conference. Over 80 percent of Kakao Mobility some 700 employees joined the labor union since then, which had only about 35 members in January.

Seo added that “since it was decided that the sell-off was not the direction we are heading in for the sustainable growth of Kakao Mobility and society, a detailed plan to execute the decision is necessary,” emphasizing that a communication channel between interested parties should continue to be operated.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]