Kakao shares sink on SK Telecom’s stake sell-off news

Kakao Corp. shares underperformed its peers and the broad market on Friday after SK Telecom Co. sold off its entire stake in the South Korean platform giant for about 400 billion won ($278.2 million).

The country’s largest mobile carrier announced earlier today in a regulatory filing that it would offload all of its holdings in Kakao – 10,818,510 shares – for 413.3 billion won based on the previous year’s book value.

However, based on the current market value, it ultimately raised 395.2 billion won from the stake sell-off in a block trade before the market opened on the same day.

On the stake sale news, Kakao shares fell 3.8% to end at 37,950 won, underperforming the broad Kospi market with about a 1% gain. Earlier, Kakao shares skidded to as low as 37,150 won apiece.

TO MAKE SK BROADBAND A WHOLLY OWNED SUBSIDIARY

SK Telecom said it has raised funds to foster its future growth engines, such as artificial intelligence, and restore its financial health.

It is also projected to use some of the proceeds from the Kakao stake sale to acquire a 24.8% stake in SK Broadband Co. from Taekwang Group holding 16.75% and Mirae Asset Group owning 8.01%, under the agreement signed last November.

Following the acquisition, SK Broadband, Korea’s No. 2 internet service provider, will become SK Telecom’s wholly owned subsidiary.

The telecom parent plans to pay 11,511 won per share, or 1.15 trillion won in total, for SK Broadband and complete the acquisition by May.

Even after the stake disposal, SK Telecom will continue collaborating with Kakao in various technology fields, said the telecom company.

In 2019, the two companies swapped stakes worth 300 billion won to forge a strategic partnership in areas such as telecommunications, digital content, future ICT and commerce.  

Under the terms, SK Telecom owned a 2.5% stake in Kakao, which, in return, held 1.6% in SK Telecom.

SK Telecom shares closed up 0.2% at 57,800 won.

Write to Hanjong Choi at onebell@hankyung.com

Sookyung Seo edited this article.