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A sudden peace has broken out in the battle for control of K-Pop music company SM Entertainment.

Its bigger rival Hybe was trying to increase its stake in the company to 40%, against the wishes of SM’s management, which favoured an investment from technology firm Kakao. Now Hybe has abandoned its efforts, at least for now.

“Hybe made this decision after observing that the market has been showing signs of overheating due to competition with both Kakao and Kakao Entertainment,” said Hybe’s statement, as reported by MBW.

“Hybe contemplated the possibility that this acquisition, along with the tender offer, may harm shareholder value, and fuel overheating of the market.”

This appears to leave the way clear for Kakao to increase its own stake in SM Entertainment to nearly 40%, although Hybe said it had discussed the plans with Kakao and “the two companies agreed to cooperate on matters related to their platforms”.

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Stuart Dredge

Music Ally's Head of Insight

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