Kakao and its entertainment unit, Kakao Entertainment, are offering to buy up to a 35% stake in SM for 150,000 won (RM515) per share, with the total value of the offer about 1.25 trillion won (RM4.3bil).
SEOUL: Kakao Corp, South Korea’s Internet giant, is launching a tender offer to become the largest shareholder at SM Entertainment Co, escalating a battle for control of the K-pop label with entertainment powerhouse Hybe Co.
Kakao and its entertainment unit, Kakao Entertainment Corp, are offering to buy up to a 35% stake in SM for 150,000 won (RM515) per share, with the total value of the offer about 1.25 trillion won (RM4.3bil).
The duo currently hold about 4.9% of SM shares and the tender offer could take that to almost 40%.
SM shares surged 14% to just below the offer price. They traded at less than 80,000 won (RM275) for most of the year through January.
The deal, if successful, would help Kakao and SM’s existing management fend off Hybe’s effort to take control of the rival music label.
Kakao had said earlier that it had no intention of taking a controlling stake, and suffered a setback last week when a court blocked its proposed purchase of a 9% holding at SM.
“We believe that this will be a successful tender offer,” said analyst Douglas Kim, who writes on the Smartkarma platform.
“The minority shareholders of SM Entertainment are cheering on as its share price appreciation will be nearly 96% from end of 2022 to the tender offer price of 150,000 won (RM517).”
Hybe, the label behind global phenom BTS, failed to get much support for its own SM tender offer, opening the door to a bidding war. The Kakao bid price is 25% above the 120,000 won (RM414) offered by Hybe.
Hybe, which secured a 14.8% stake in SM from founder Lee Soo-man, added only a fraction of the shares in rival SM in its offer, an embarrassing setback for the label which had argued its takeover attempt was critical to preserving K-pop’s global influence.
Hybe secured about 15.8% shares and it can also control a further 3.65% voting rights on behalf of the founder Lee. — Bloomberg
