Kakao Mobility's talks to acquire FreeNow in deadlock

Kakao Mobility Corp.’s ambition to go global has hit a roadbock after its parent group Kakao Corp. rejected its draft bid to buy Germany-based mobility service app FreeNow, according to people with knowledge of the matter on Wednesday.

Last month, South Korea’s largest ride-hailing app launched a preliminary bid for an 80% stake in FreeNow, Europe’s largest mobility service provider, in which BMW Group and Mercedes-Benz Mobility are major shareholders.

Kakao was understood to offer about 400 billion won ($310 million) for the purchase.

However, Kakao Corp.’s investment review committee expressed its opposition to the draft bid for FreeNow on the grounds of its high price tag.

Among the committee members is Chung Shina, Kakao Corp.’s chief executive nominee. She is set to take the helm of the mobile conglomerate.

The committee oversees Kakao subsidiaries’ business expansion. Rather than chasing FreeNow, it suggested Kakao Mobility target mobility service providers with a focus on hub countries in Europe such as the UK, France, Italy and Spain.

In a compromise based on the committee’s recommendation, Kakao revised its proposal, which market insiders said included lowering the bid price. However, it failed to win over FreeNow. 

Free Now operates in over 150 cities in nine countries in Europe, commanding about 90% of Europe’s taxi-hailing service market.

Now that talks between Kakao and FreeNow shareholders are in a deadlock, market insiders speculate Kakao might drop out of the race.

FreeNow’s shareholders such as BMW and Mercedes-Benz appeared not to be in a rush to sell the mobility platform, which flagged robust earnings last year, at a lower price.

FreeNow posted a 74% surge to 38.4 million euros ($42 million) in revenue in 2022 from the year prior.

Kakao stressed it remains committed to the talks to buy FreeNow. 

“We are adjusting our opinions on service operations in detail. Our talks have not broken down,” said a Kakao Mobility Official. “There is no deadline set to finish our negotiations.”

In March of this year, Kakao acquired Splyt, a UK ride-hailing startup, in its first cross-border deal.

However, Kakao’s business expansion has been at a standstill as the country’s mobile giant has come under fire for moral hazards faced by a number of top executives of its units and some of its business practices, deemed unethical.

Earlier this month, Kakao Pay Corp. failed to carry out the previously agreed deal with Siebert Financial Corp. to increase its stake in the Nasdaq-listed financial advisory firm to 51% from the current 19.9%.

In a letter sent to Kakao Pay last month, Siebert said there was a significant negative issue that would make it difficult to complete the deal.

Write to Ju-Hyun Lee at deep@hankyung.com
 


Yeonhee Kim edited this article.