Kakao Will Acquire SM Entertainment: HYBE To Pursue Platform Business Partnership Instead

The aggressive acquisition race that began in Feb 2023 is coming to an end.

In an exclusive report, Money Today confirmed that as of March 12 (KST), Kakao will acquire SM Entertainment by becoming its largest shareholder—sealing the deal by purchasing 35% of SM Entertainment’s shares at the price of ₩150,000 KRW (about $114 USD) per share.

Kakao Chairman Kim Beom Su | Chosun

The report also confirmed that HYBE is dropping its pursuit of SM Entertainment—ending the aggressive acquisition race that began in Feb 2023. Earlier, HYBE was reported to be “striking back”; But an insider told Money Today that “Kakao and HYBE have come to an agreement with negotiations after negotiations.”

HYBE Is Reportedly Considering Striking Back After Kakao Begins Purchasing Even More Shares Of SM Entertainment

Going forward, Kakao will bring on a board of directors to operate SM Entertainment and manage its business, while HYBE will work toward a platform business partnership instead. None of HYBE’s recommended personnel will be included in the new board of directors at SM Entertainment, according to the report.

The report suggested it is possible for Kakao to attempt a complete merge of Kakao Entertainment and SM Entertainment—though this piece of information has not been verified.

SM Entertainment CEO Chris Lee | Han Myung Gu/WireImage

Kakao has a lineup of the recommended board of directors. This new board will become the heart of SM Entertainment’s business management. HYBE is going to stop purchasing more shares. Instead, HYBE and SM Entertainment will partner to develop a platform business. Both parties concluded, after negotiations, that it is unreasonable to continue the battle of acquisitions while bleeding out in finances. As announced earlier, Kakao will become the largest shareholder after purchasing 35% of SM Entertainment’s shares at the price of ₩150,000 KRW (about $114 USD) per share.

— Insider

Kakao has been working toward the ownership of SM Entertainment for close to two years. And now, the end is near: With ₩1.39 trillion KRW (about $1.05 billion USD) in total for the acquisition, SM Entertainment will belong to Kakao. Kakao will, as planned, complete its purchasing of the shares before March 26.

Source: Money Today and E Daily
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