South Korean internet giant Kakao has launched a bid to become the largest shareholder of K-pop agency SM Entertainment, escalating its battle against BTS label HYBE.
Kakao and its subsidiary Kakao Entertainment said today (March 7) in a regulatory filing that it is tendering an offer to buy up to 35 per cent of SM Entertainment for ₩150,000 per share – a 25 per cent hike over HYBE’s own bid last month. If successful, the offer could see Kakao own nearly 40 per cent of the entertainment agency, up from its current 4.9 per cent stake.
“With the direction of the three companies’s growth facing a threat, Kakao decided it is inevitable to secure the largest shareholder position to protect the partnership with SM Entertainment,” Kakao said in a statement, per Reuters, adding that the bid is to ensure stable management at the music label.
Kakao’s new offer sent SM Entertainment shares soaring 14 per cent to ₩148,500 today, according to Reuters. It comes just a day after Kakao’s previous plan to acquire around 9 per cent of SM, through the issuing of new shares and convertible bonds, fell through following a court injunction.
The injunction had been filed by SM Entertainment founder and former chief producer Lee Soo-man’s legal counsel, who alleged that Kakao’s acquisition of company shares was an “act of illegality”.
The current largest shareholder of SM Entertainment is HYBE, which has acquired nearly 15.8 per cent of the agency just last month – though far short of its 40 per cent goal. The entertainment giant had initially acquired a 14.8 per cent stake from Lee in February, before buying another 0.98 per cent during a tender offer, both at ₩120,000 per share – a fraction of the 25 per cent it had hoped to acquire from minority shareholders and a figure that “fell short of our expectations,” HYBE said, according to Korea JoongAng Daily.
According to Bloomberg, the battle over SM Entertainment will take centre stage during the agency’s annual shareholders meeting, which is scheduled for March 31, where both sides are each seeking to form a board with their recommended directors.
HYBE said it had no comment when contacted by NME.
HYBE’s acquisition of SM Entertainment shares has largely been opposed by SM leadership and staff, with SM CFO Jang Cheol-hyuk characterising the situation as a “hostile takeover”.
Meanwhile, HYBE Labels CEO Park Ji-won has said that SM Entertainment will be able to operate with ”complete autonomy” should its acquisition plans come to fruition. He also outlined plans for HYBE and SM Entertainment to integrate their “creative capabilities and content-oriented culture” to “showcase a historic innovation in the global scene”.