Kakao (CEO Hong Eun Taek) will join hands with SM Entertainment to speed up its competitiveness in the music and content business.
On February 7, Kakao announced that it has secured a 9.05% stake in SM Entertainment. SM Entertainment will acquire 1,230,000 new shares issued in the form of a third-party allocation paid-in capital increase and secure 1,140,000 shares (based on conversion to ordinary shares) through the acquisition of convertible bonds. Through this investment, Kakao will become the second-largest shareholder of SM Entertainment.
Along with the investment, Kakao, Kakao Entertainment, and SM Entertainment signed a three-way business agreement. The three companies plan to take the lead in enhancing the global status of K-culture through multilateral business cooperation in the rapidly changing music and content environment.
In particular, Kakao Entertainment, which has a unique IP value chain, including planning and production capabilities, platforms, and artists covering stories, music, and media, and SM Entertainment, which has led the global Hallyu and K-POP craze, are expected to create strong synergy.
In the future, Kakao Entertainment and SM Entertainment will also cooperate to strengthen IP competitiveness by promoting global management business together using networks such as overseas partners of each company and jointly planning K-POP artists through global auditions. In addition, it plans to continue cooperation in various businesses along with music businesses such as the production and distribution of global records and sound sources.
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