HYBE suspends their acquisition process of SM Entertainment, reaching a grand agreement with Kakao

On March 12th, HYBE reportedly decided to suspend their acquisition process of SM Entertainment. HYBE judged that the market is showing signs of overheating due to their competition with Kakao/Kakao Entertainment, and comprehensively considered that this could have a negative impact on HYBE’s shareholder value.

HYBE secured SM shares from SM’s former executive producer Lee Soo Man and conducted a tender purchase. They then set an appropriate acquisition price range considering the mid-and long-term value of SM and the tangible and intangible costs that may arise during the Post Merger Integration process. 

However, HYBE judged that the price they would have to offer for the acquisition of SM shares would exceed the reasonable range they set. It is because the acquisition competition has intensified due to Kakao/Kakao Entertainment’s additional public tender offer. Moreover, even the stock market is overheating.

As a result, HYBE decided to suspend their acquisition process, considering that pursuing the acquisition of SM shares by countering Kakao’s public tender offer could have a negative impact on HYBE’s shareholder value and further fuel market overheating.

Amid this situation, HYBE recently had a discussion with Kakao, and the two sides have reached a grand agreement. Accordingly, HYBE agreed to suspend their process of acquiring SM’s management rights, and a platform-related collaboration between the two companies. 

Source: Nate