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Kakao offers to buy 35% of K-pop company SM in escalating battle


HONG KONG– South Korean tech company Kakao has launched a takeover bid to buy up to 35% of K-pop agency SM Entertainment and become its largest shareholder, intensifying a battle with entertainment company Hybe for control on Tuesday. of the society.

Kakao offered a tender price of 150,000 won ($115) per share, bringing the total bid value to 1.25 trillion won ($960 million). SM, the group behind popular K-pop groups such as NCT and aespa, saw its shares jump more than 15% to 149,700 won.

Kakao currently owns approximately 4.9% of SM shares. If the tender offer is successful, the company would control approximately 40% of SM’s stock and successfully fend off Hybe’s attempt to control SM Entertainment.

Senior executives at SM expressed support for Kakao’s “friendly” takeover bid and described the technology company as the “optimal strategic cooperative partner” in a statement released Tuesday.

Its tender offer comes weeks after Hybe, the entertainment company behind global K-pop sensation BTS, announced a tender offer for 25% of SM shares at 120,000 won ( $93) per share shortly after acquiring a 14.8% stake in the company from SM. founder Lee Soo-man, who is currently estranged from the company he founded.

Hybe is now SM’s largest shareholder and aimed to increase its stake to around 40%. However, shareholders did not support its takeover bid as the price was deemed too low. Following the end of the takeover bid, Hybe currently owns around 15.8% of its rival.

“Unlike Hybe, who seeks to gain control of the SM board through a hostile M&A, Kakao respects the unique tradition and identity of SM and will ensure the independent operation of the company as well as the continued activities of SM artists,” the statement read.

Senior SM Entertainment executives opposed Hybe’s attempt to increase ownership of the company, describing it as a hostile takeover attempt and saying it would lead to industry monopolization, increasing costs for fans. . He also said that SM artists might not be prioritized if Hybe controlled the company.

Together, SM and Hybe account for 70% of album and digital music revenue in the K-pop industry.

Kakao’s tender offer came a day after SM Entertainment canceled a deal to issue new shares and convertible bonds as part of a deal that would have made Kakao SM Kakao’s second largest shareholder. SM with a 9.05% stake in the company, after a Seoul court ruled in favor of Lee. , which had filed an injunction against the deal.


AP reporter Juwon Park in Seoul, South Korea, contributed to this report.

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.