Kakao Mobility Corp.’s global expansion efforts encountered a significant obstacle as its parent company, Kakao Corp., rejected a draft bid to acquire a majority stake in German mobility service app FreeNow. The decision came from Kakao Corp.’s investment review committee, which deemed the proposed 400 billion won ($310 million) purchase price too high.
Last month, Kakao Mobility, South Korea’s largest ride-hailing app, initiated a preliminary bid for an 80% stake in FreeNow, Europe’s leading mobility service provider, where BMW Group and Mercedes-Benz Mobility hold significant shares. However, the committee, including chief executive nominee Chung Shina, recommended focusing on mobility service providers in key European hub countries like the UK, France, Italy, and Spain, instead of pursuing FreeNow.
Kakao Mobility revised its proposal following the committee’s advice, reportedly lowering the bid price. Despite these adjustments, the negotiations with FreeNow did not progress, leading to a current deadlock. Market insiders now speculate that Kakao might withdraw from the acquisition race.
FreeNow, which operates in over 150 cities across nine European countries and dominates approximately 90% of the continent’s taxi-hailing service market, reported a substantial 74% increase in revenue in 2022, reaching 38.4 million euros ($42 million). Its shareholders, including BMW and Mercedes-Benz, are not pressured to sell the thriving mobility platform at a reduced price.
Despite these setbacks, Kakao Mobility remains committed to the acquisition talks. A Kakao Mobility official stated, “We are adjusting our opinions on service operations in detail. Our talks have not broken down.”
This development follows Kakao’s first cross-border deal in March, acquiring UK ride-hailing startup Splyt. However, Kakao’s business expansion has faced challenges recently, including ethical concerns and moral hazards among top executives, as well as stalled negotiations with Siebert Financial Corp. for increasing its stake in the Nasdaq-listed firm.
