HYBE aborts SM acquisition. Kakao formalizes management control
The “money war” between Kakao and HYBE over the acquisition of SM Entertainment (SM) has come to an end. HYBE has suspended its acquisition of SM and will hand over control of the company to Kakao in exchange for a platform collaboration.
HYBE announced in a press release that it has suspended the SM acquisition process. “From a mid- to long-term perspective, we set an appropriate acquisition price range that considered the value of SM and the tangible and intangible costs that may be incurred in the integration process after the acquisition,” the company said. “However, in the current situation where the competition is intensifying due to additional tender offers from Kakao and Kakao Entertainment, and the stock market is overheating, we determined that the price to be offered for the acquisition of SM is beyond the appropriate range,” it said.
In a statement, Kakao also said, “Kakao and Kakao Entertainment respect HYBE’s decision to suspend the acquisition of SM. We have agreed to continue various cooperative relationships with HYBE and SM Entertainment to enhance the global status of K-pop and K-culture as partners with mutual positive impact. Now that HYBE’s decision has resolved the uncertainty, we will proceed with the tender offer scheduled for the 26th as planned to acquire additional shares and materialize business cooperation with HYBE and SM Entertainment.”
Out of respect for SM’s employees, artists, and fans, Kakao will ensure autonomous and independent operations and accelerate its global growth centered on the future vision and strategic direction, including SM 3.0, proposed by the current management team. In particular, based on SM’s global IP and production system, Kakao and Kakao Entertainment’s IT technology and business capabilities in the IP value chain, the plan is to create new synergies through the combination of IT and IP beyond the expansion of music IP.
In the meantime, Kakao and HYBe have been fighting over the SM acquisition. In February, Kakao participated in Hive’s capital increase and secured a 9.05% stake, but SM’s former executive producer Lee Soo-man sold his 14.8% stake to HYBE and filed for a preliminary injunction against SM to issue new shares. After the court granted the preliminary injunction, the two companies launched a full-scale acquisition battle, with Kakao announcing plans to tender a 35% stake in SM for 150,000 won per share by March 26.
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