HYBE and Kakao suddenly come to an agreement due to the burden of the intensifying ‘SM share acquisition’ battle?
HYBE and Kakao, which have been in an intense confrontation after declaring their purchases of SM shares, reportedly rushed to reach an agreement before suffering damage from the excessive competition.
Regarding the rumors of HYBE and Kakao’s agreement, Kakao’s representative said to Daily Sports on March 11th, saying “There is nothing we can say at this moment”, adding “We cannot even confirm whether it is true or not that HYBE and Kakao have met.”
HYBE’s officials also refuted to comment, saying “We are checking related information”.
On the morning of the same day, Chosun Ilbo reported that HYBE and Kakao had reached an agreement that they would not compete over SM shares, while JoongAng Ilbo said HYBE and Kakao had sat at the negotiating table. It is not yet confirmed whether an agreement has been reached, but it seems to be true that both companies have met to discuss the issue.
Recently, HYBE and Kakao have been competing to become the largest shareholder of SM Entertainment. While HYBE secured shares from SM’s former executive producer Lee Soo Man, Kakao negotiated with SM’s current management board to obtain shares through the issuance of new shares and convertible bonds. However, both companies have failed to secure a majority stake in the company due to various setbacks.
On March 7th, Kakao declared a public takeover bid to invest 1.25 trillion won and secure up to 39.9% of SM shares. This move caused SM’s stock price to soar to 160,000 won, but as of March 10th, it settled at 147,800 won.
The reconciliation in the intensified battle to acquire SM shares between big companies seems to have been created because both have started to sense the crisis of this overheated competition. From the perspective of HYBE, they invested hundreds of billions of won to become the largest shareholder of SM, but if Kakao succeeds in the public takeover, they will lose control. As Kakao has already declared a tender offer, there is a high possibility that HYBE will fail due to a rise in stock prices if they jump into a public takeover once again,
As a result, the speculation that HYBE and Kakao may choose the “third way” of forming a strategic partnership has been raised. However, it is still unknown whether the two companies will join forces and become joint owners of SM, or whether the fierce battle will continue if one of them gives up or the negotiation itself collapses.
Source: Naver
