Kakao is reportedly set to acquire a stake in SM Entertainment, creating yet another super-alliance within the Korean entertainment industry.
According to a report from Edaily, Kakao is very close to acquiring a portion of SM Entertainment from Lee Soo Man‘s shares. The move would firmly set in place the battlegrounds within the global K-Pop market between Naver–HYBE–YG and Kakao-SM.
Kakao is pushing to acquire shares directly from Lee Soo Man, however it was not stated what percentage of Lee Soo Man’s 18.73% stake in SM Entertainment would be transferred over to Kakao. In addition, other specific details of the transfer were not yet revealed, such as whether the acquisition would be only Kakao gaining Lee Soo Man’s stake, or if there would be a swap of stakes between Kakao and Lee Soo Man.
Naver was rumored to be interested in acquiring a stake in SM Entertainment, but that is actually different from the truth.
SM Entertainment was negotiating with Kakao from the start. There was a delay because an agreement to the terms of the contract could not be met, but in the end, they recently made an agreement.
Kakao recently launched Kakao Entertainment through a merger of all of their subsidiaries. There are about 50 subsidiaries and related companies under the Kakao Entertainment umbrella, but the music division is considered weaker than their drama production, actors, and movie divisions.
If a portion, or even all of of Lee Soo Man’s stake in SM Entertainment is transferred to Kakao, it is highly unlikely the management style of SM Entertainment would change, as Kakao leaves the operations and management of their subsidiaries to the original company.
Lee Soo Man is still likely to be involved in the production of new songs by SM Entertainment artists.
— Music industry insider
Earlier, it was reported that both Naver and Kakao were fighting over the possibility of acquiring Lee Soo Man’s shares.