Kakao Pay Corp. abandoned its acquisition of two Shinsegae Group payment platforms just before completion, leaving South Korea’s retail conglomerate scrambling to salvage its asset divestiture strategy.
The mobile payments unit withdrew from the deal to purchase SSG Pay and Smile Pay for more than 400 billion won ($287.2 million), according to investment banking sources. The reversal came despite both sides having resolved pricing and operational terms ahead of final documentation.
The collapse represents “an abrupt, last-minute decision by Kakao Pay” after negotiations had cleared major obstacles, said a person familiar with the matter who cited parent company Kakao Corp.’s directive to halt the transaction.
The deal’s failure marks the second setback for Shinsegae’s efforts to offload non-core digital assets. Earlier negotiations with fintech firm Viva Republica, operator of the Toss app, fell through last year at an estimated valuation of 700 billion won.
Kakao Pay’s retreat appears linked to its parent company’s pivot toward artificial intelligence investments. The tech giant recently sold its stake in SK Square Co. for 430 billion won to raise funds for AI development, aligning with government initiatives and a new strategic partnership with OpenAI announced in February.
The acquisition would have strengthened Kakao Pay’s position against market leader Naver Pay, which dominates Korea’s digital payments sector. Combined, SSG Pay and Smile Pay serve approximately 25 million users across Shinsegae’s e-commerce and retail network.
Regulatory scrutiny has also complicated Kakao Pay’s operations. Financial authorities penalized the company for sharing user credit information with China’s Alipay without consent since 2018, while awaiting additional corrective measures.
Shinsegae confirmed the deal’s termination, attributing the breakdown to “changes in the investment priorities of Kakao Group” and pledging to focus on developing internal digital payment capabilities instead.
