Kakao has become the largest shareholder with a 40% stake in SM Entertainment.
Kakao succeeded with more than twice the target quantity in the SM tender offer.
According to Korea Investment & Securities, which supervised the tender offer on March 27th, as a result of Kakao’s tender offer for SM stocks from the 7th to the 26th, the number of subscribed shares recorded 18,880,227 shares. This figure far exceeds the number of 8,333,641 shares originally scheduled for the tender offer. The final competition rate for subscription is 2.27 to 1.
As the number of subscription shares exceeds the scheduled number, the proportional distribution method is expected to be applied. Proportional distribution is a method of dividing the number of shares subscribed equally in proportion. The allocation rate is 44.1395170%. SM shareholders participating in the tender offer can sell only 44.1395170% of the shares they have applied for at the tender offer price of 150,000 won per share.
As a result, with Kakao holding a 20.78% stake and Kakao Entertainment holding a 19.13% stake, the Kakao Group rose to the position of SM’s largest shareholder with a total stake of 39.90%.
As Kakao secures the position of the largest shareholder in SM, it is expected to speed up the promotion of the ‘Beyond Korea’ strategy to strengthen global competitiveness by diversifying IP into various fields.
At the regular shareholders’ meeting to be held on March 31st, director candidates recommended by Kakao are expected to enter the board of directors without difficulty. According to the revised announcement on the 24th, the director candidates recommended by HYBE have withdrawn their agenda.
The current executives of Kakao and SM recommended three candidates for inside director positions: Jang Cheol Gyeok, SM Entertainment CFO, Kim Ji Won, SM Entertainment Marketing Center Head, and Choi Jeong Min, SM Entertainment Global Business Center head.