Breaking: HYBE Announces Withdrawal From SM Acquisition After Coming To Agreement With Kakao (2024)
HYBE has announced that it “will discontinue the acquisition process of SM Entertainment.”
On March 12, HYBE released an official statement announcing the end of its highly public battle with Kakao over acquiring shares of SM Entertainment.
Last month, HYBE signed a deal with SM Entertainment founder Lee Soo Man to acquire a 14.8 percent stake in the company, making them the largest shareholder. The deal came in response to Kakao’s attempt to purchase a 9.05 percent stake in SM Entertainment by buying newly issued shares and convertible bonds—an attempt that Lee Soo Man denounced as illegal and which he successfully blocked by taking SM Entertainment to court, where his request for an injunction was granted.
With SM Entertainment legally banned from issuing new shares or convertible bonds to Kakao, the conglomerate moved on to attempting to buy shares from existing stockholders instead. Earlier this week, Kakao made a newtender offer to SM Entertainment shareholders at a higher price than what was recently offered by HYBE.
Two days ago, it was reported that HYBE and Kakao had come to an agreement regarding their battle for management rights and control of SM Entertainment—and it has now been confirmed that the result is HYBE’s withdrawal from the acquisition.
According to a press release, HYBE “made this decision after observing that the market has been showing signs of overheating due to competition with both Kakao and Kakao Entertainment.”
The agency added, “HYBE contemplated the possibility that this acquisition, along with the tender offer, may harm [HYBE] shareholder value and fuel overheating of the market, in making the decision.”
Not only did HYBE and Kakao reach an agreement regarding SM Entertainment’s management, but they also agreed to “cooperate on platform-related matters” in the future.
HYBE announced on March 12 that it was pulling out of its takeover bid for SM Entertainment
SM Entertainment
SM Entertainment Co., Ltd.
It is one of South Korea's largest entertainment companies and has been responsible for fostering and popularizing the careers of many K-pop stars garnering huge global fanbases.
https://en.wikipedia.org › wiki › SM_Entertainment
after “observing that the market has been showing signs of overheating due to competition with both Kakao and Kakao Entertainment”, which it feared would have a negative impact on shareholder value.
In October 2022, SM Entertainment canceled its production contract with Lee, the company's founder. Lee sold HYBE the majority of his 15.8% stake in February 2023 and retained an option to sell his remaining shares to HYBE one year later. That purchase briefly made HYBE the leading shareholder in its competitor.
“Kakao, Kakao Entertainment and SM Entertainment are opting for co-growth and to collaborate on businesses to create synergies", the statement concluded, according to Korea JoongAng Daily. The involvement of Kakoa in SM has been pretty eventful ever since it decided it wanted a sizable stake in the K-pop firm.
On March 28, 2023, Kakao announced that it successfully acquired 35% stake in SM Entertainment through its tender offer bid, resulting a combined 39.87 percent stake that owned from Kakao and its subsidiary, Kakao Entertainment respectively, becoming SM's largest shareholder.
South Korean internet company Kakao has become the largest shareholder of SM Entertainment, winning a battle for control of one of the country's most iconic music agencies. Kakao and its entertainment unit have increased their stake in SM to 39.9%, they said in a Tuesday regulatory filing.
EXO is one of SM Entertainment's most popular acts. SM Entertainment Co., one of Korea's largest entertainment companies, dropped the most in two months as members of one of its most popular bands sought to end their exclusive contracts.
As of May 2023, the K-pop entertainment HYBE Corporation achieved the highest market cap in the South Korean stock exchange market, at around 11.37 trillion South Korean won. HYBE Corporation, formerly known as Big Hit Entertainment, is home to globally popular K-pop group BTS.
In addition, 96.9% of all mobile Internet users in Korea use instant messenger apps such as KakaoTalk. This means that South Korean users are almost completely reliant on mobile for communications, e-commerce, social media, and gaming.
The fight between HYBE and Kakao, which involved litigation and public accusations of wrongdoing, ended in March, after HYBE gave up on its takeover bid and Kakao took a 39.9% stake in SM, effectively giving it control of the company.
Recently JTBC reported about EXO's D.O. leaving SM Entertainment and joining a new agency formed by his longtime manager. Confirming the same, SM Entertainment issued a statement. It read, as per Soompi, "D.O.'s exclusive contract with us will expire in early November.
SM Entertainment, home to such K-pop stars as aespa and RIIZE, promoted Tak Young-jun to co-CEO alongside existing CEO Jang Cheol-hyuk, the company announced Wednesday (March 27). Tak was also named executive director of the company's board. Tak, who joined SM Entertainment in 2005, has served as COO since May 2023.
Kakao (Korean: 카카오) is a South Korean Internet company that was established in 2010. It formed as a result of a merger between Daum Communications and the original Kakao Inc.
KakaoTalk is available in 15 languages and used in over 130 countries. On July 26, 2011, Kakao Corp. established Japanese Corp., Kakao Japan and appointed Cha-Jin Park as a representative. According to company officials, the app appears to be very actively used in Japan.
Korean tech giant Kakao has gained the upper hand in the battle for control of K-pop agency SM Entertainment, after HYBE Corp., the firm behind music idols BTS, said March 12 that it had called off its takeover bid.
BigHit Entertainment IS HYBE. It's just a new name, and a lot more branches of the company. To protect the artists, HYBE has seperated its labels- now under HYBE Labels, and they gained new labels and made new labels along the way. Bang Si-Hyuk, HYBE's founder made BigHit Music as the Label in charge of BTS's music.
Addressing the widespread speculation and market activity, HYBE issued a statement on November 17th, clarifying, "The members did not sell their shares, and with the termination of the contract between Chairman Bang Si-Hyuk and BTS members as shareholders, they are no longer considered special related parties.
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