Korean Kakao Pay’s acquisition of US' Siebert collapses
Mi-Hyun Jo
Dec 20, 2023 (Gmt+09:00)
Kakao Pay’s headquarters in Pangyo, so-called Silicon Valley in South Korea (File photo by Moon-Chan Hur) South Korean Kakao Pay Corp.'s takeover deal of US-based Siebert Financial Corp. has failed amid the growing legal risks surrounding top executives of the leading mobile platform in the Asian country.
Kakao Pay and Siebert on Wednesday said that they agreed to terminate the second tranche stock purchase agreement previously signed, however. Siebert is set to pay $5 million to Kakao Pay as a settlement fee in installments for 10 quarters from March 29, 2024, to June 30, 2026.
“After careful consideration, we believe the decision to terminate the stock purchase agreement is in the long-term interest of Siebert and our stockholders,” said Siebert Chairman and CEO John J. Gebbia in a joint statement.
“This resolution places Siebert in the best position to execute on the exciting opportunities before it while removing any uncertainty that might have otherwise been present had this compromise not been reached.”
NEGATIVE ISSUE FOR SECOND TRANCHE PURCHASE AGREEMENT
In a letter last month Siebert told Kakao Pay that there was a significantly negative issue that would make it difficult for them to complete the second deal. The US company also notified the US Securities and Exchange Commission (SEC) that the South Korean authorities have taken measures to deal with the risks of Kakao affiliates, which had a negative impact on Kakao Pay.
Siebert, founded in 1967, provides a full range of brokerage and financial advisory services including securities brokerage, investment advisory and insurance offerings, securities lending, and corporate stock plan administration solutions through six subsidiaries.
Kakao Pay had planned to expand its business into overseas markets such as Southeast Asia with the acquisition of Siebert.
The South Korean fintech firm is set to maintain its right to designate one director to Siebert’s board of directors despite the latest agreement as it holds a 19.9% stake, Kakao Pay and Siebert said.
“We welcome the opportunity to continue our strategic investment in Siebert and look forward to working collaboratively with Siebert to help grow its business,” said Kakao Pay CEO Shin Won-Keun.