Things are moving fast in South Korean tech company Kakao’s efforts to buy a stake in K-Pop firm SM Entertainment.
In February Kakao announced that it was buying a 9.05% stake in the company for $172.8m, but the plan was challenged by rival K-Pop firm HYBE – which is also acquiring a stake in SM amid some controversy – resulting in a court injunction blocking the Kakao deal.
Yesterday, Kakao duly cancelled the plan to buy the 9.05% stake, but swiftly announced plans to acquire an even bigger slice of SM. It is launching a ‘tender offer’ (a public offer to buy shareholders’ shares in a company) to acquire up to 35% of SM’s shares, taking it to 39.9% in total as it already owns a 4.9% stake.
Kakao and HYBE are thus duelling for control of SM Entertainment, with Billboard noting that HYBE recently made its own tender offer for SM shares, but only managed to snap up “less than 1%” of the stock.
High stakes (literally!) indeed, but the risk around this battle is paralysis for SM’s core business in a year when the K-Pop industry had been hoping to push on with its global expansion.
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