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Hybe to Sell Stake in Rival SM Entertainment to Kakao Corp
Kakao Entertainment
After a failed attempted takeover bid, Hybe Corp., the company behind K-pop group BTS, has announced that it will sell its 15.8% stake in agency rival SM Entertainment to tech giant Kakao Corp for around $437 million. Hybe initially purchased the 14.8% stake in SM in February from K-pop pioneer Lee Soo-man, with the expectation of buying the remaining 3% tranche. However, opposition from SM’s management, coupled with Kakao’s richer offer to purchase up to 35% of SM’s existing equity, prompted Hybe to admit defeat and withdraw its tender.
The Takeover Battle Between Hybe and Kakao
SM Entertainment, the South Korean entertainment company behind some of the biggest K-pop stars, including EXO and Red Velvet, has been the target of a dramatic takeover battle between rivals Hybe Corp and Kakao Corp. Hybe’s initial purchase of the 14.8% stake in SM from company founder Lee Soo-man caused concern among SM’s management, who launched a range of measures including a content distribution deal and the sale of newly issued shares and bonds to Kakao entities. While a court initially ruled against SM creating new shares for the purpose of defeating a takeover bid, Kakao’s significantly richer offer to all shareholders for up to 35% of SM’s existing equity made Hybe’s bid untenable, leading to Hybe’s withdrawal of its tender in March.
Kakao’s Growing Presence in K-pop and the Music Industry
Kakao Corp’s successful offer to purchase the stake in SM Entertainment solidifies its growing presence in the K-pop and music industries. Last week, Kakao subsidiary Kakao Entertainment America announced a deal with Columbia Records to manage K-pop girl group IVE, adding to its ownership of Melon, Korea’s leading music streamer. This move marks a significant step forward in Kakao’s ambition to become a major player in the global music market.
