The battle over SM shares is over and Kakao will become the major shareholder of the company.
On March 12, HYBE announced the termination of the acquisition process for SM Entertainment (SM), and the resolution of management disputes between them and Kakao, a Korean technology company.
HYBE stated that it decided to halt the acquisition process due to various internal and external factors, including the over-heating market caused by competition between Kakao and its entertainment affiliate, Kakao Entertainment.
HYBE had set an appropriate acquisition price range based on SM’s long-term value and the costs that could arise from post-merger integration, but the competition intensified with Kakao Entertainment’s additional open tender offer, and the acquisition price was considered to have exceeded the appropriate range.
HYBE believed that pursuing the acquisition through a counter-open tender offer could have a negative impact on its shareholders’ value and could exacerbate the market’s overheating, leading to the decision to halt the acquisition process.
It was also revealed that HYBE and Kakao recently held discussions and reached an agreement to terminate the SM management acquisition process and also agreed on collaboration plans related to their platforms.
Kakao and Kakao Entertainment have stated that they respect HYBE’s decision to suspend the acquisition of SM. Kakao said that they have agreed to continue their diverse cooperation with HYBE, which positively impacts K-pop and Korean culture’s global status, as partners who give and receive mutual benefits.
They also announced that they will proceed with the planned public purchase until March 26th to secure additional shares, and solidify business cooperation between HYBE and SM Entertainment.
In addition, they promised to ensure autonomous and independent operation to respect SM’s strongest assets and driving force, its employees, artists, and fandom, and to accelerate global growth centered on future vision and strategic direction, including SM 3.0.
They plan to create new synergies through the combination of IT and IP, based on SM Entertainment’s global IP and production system, and Kakao and Kakao Entertainment’s IT technology and IP value chain business capabilities beyond the expansion of music IP. They aim to strengthen each company’s global competitiveness and actively strive to make K-culture industry another national competitiveness.
Furthermore, they stated that in order to continue growth on a fiercely competitive global stage, it is necessary to have excellent IP competitiveness and IT technology, as well as fair competition and cooperation with partners in the industry. Kakao and Kakao Entertainment will contribute to increasing K-culture’s global status and growing it into a future key export industry for Korea through fair cooperation and competition with partners in the industry.
Finally, Kakao stated that they feel a deep sense of responsibility for the concerns of shareholders, employees, artists, and fans of both companies, as well as the many people who love and cherish K-Culture during the equity acquisition process.
They also mentioned that they will do their best to quickly and smoothly complete the acquisition based on the agreement reached with HYBE, taking into account the concerns of the people and financial authorities regarding the competitive process.
SM also announced that they respect the agreement between Kakao and HYBE to suspend the acquisition of HYBE’s management rights.
Through an official press release, SM stated that “Through this agreement, SM will speed up the SM 3.0 strategy promised to shareholders, members, fans, and artists, and will definitely achieve the future vision of ‘leap to a global entertainment company centered on fans and shareholders.’ Through this, we will continue to expand corporate value enhancement and shareholder return policies for all shareholders.”
Source: (A)
