Kakao Mobility’s plan to acquire FreeNow faces setback due to objection

[Courtesy of Kakao Mobility]

Kakao Mobility Corp.’s plan to acquire FreeNow, a leading taxi platform in Europe, is facing hurdles as its largest shareholder Kakao Corp. opposed the proposal.

According to industry sources on Wednesday, Kakao Mobility’s initial plan to conclude the negotiations for the acquisition of FreeNow within this year is on hold as the company faced opposition from its parent Kakao that owns a 57.3 percent stake as of the end of the third quarter.

Kakao Mobility submitted a preliminary bid proposal for the acquisition in mid-November after a two-month-long due diligence from the end of September, with an aim to acquire about an 80 percent stake in the ride-hailing company.

The proposed acquisition price was reportedly in the range of 300~400 billion won ($232 million~$309 million).

During Kakao’s review of the proposed acquisition that began in November, however, the proposal was rejected on the grounds that the acquisition price is too high. Instead, Kakao suggested a revision in the acquisition plan to narrow the target to certain countries and cities with high tourist demand.

Kakao Mobility, however, is reportedly still determined to acquire the company as it hopes to expand business overseas, including in Europe.

Kakao Mobility had desired to exclude some of the loss-making businesses from the acquisition deal, but the seller opposed Kakao Mobility’s proposal, preferring to sell the entire businesses, leading to prolonged negotiations.

Both parties are leaving open the possibility of resuming negotiations in the New Year. Kakao Mobility made sure that the acquisition “has not collapsed” for now.