Kakao Outbids HYBE With New Tender Offer To SM Stockholders In Attempt To Secure 35 Percent Share

Kakao has made a tender offer to SM Entertainment shareholders in a bold new bid to overtake HYBE as the largest shareholder of the company.

On March 7, Kakao announced a new tender offer for SM Entertainment shares in an attempt to acquire a 35 percent stake in the company, marking the conglomerate’s latest move in its ongoing battle with HYBE.

Kakao has offered SM Entertainment stockholders 150,000 won (approximately $115) per share, a higher price than the 120,000 won (approximately $92) offered by HYBE in its recent bid to acquire a 25 percent stake in the company. HYBE’s tender offer, which ended last week, only resulted in an acquisition of just under 1 percent additional shares. 

Should Kakao’s tender offer succeed, the tech giant—which already holds a 4.9 percent stake in the company—will become the largest shareholder of SM Entertainment by far with 39.9 percent of all shares.

Last month, HYBE became the largest shareholder of SM Entertainment when founder Lee Soo Man sold most of his shares to the agency, giving it a 14.8 percent stake in the company he’d founded. The deal came in response to Kakao’s attempt to purchase a 9.05 percent stake in SM Entertainment by buying newly issued shares and convertible bonds—an attempt that Lee Soo Man denounced as illegal and which he successfully blocked by taking SM Entertainment to court, where his request for an injunction was granted.

With SM Entertainment now legally banned from issuing new shares or convertible bonds to Kakao, the conglomerate is attempting to buy shares from existing stockholders instead.

Meanwhile, SM Entertainment’s top executives have expressed support for Kakao’s new tender offer, which ends on March 26. A group of the agency’s highest-ranking executives said in a statement, “Unlike HYBE seeking to take over SM’s board of directors through a hostile merger and acquisition, Kakao is the best horizontal and strategic partner for the successful implementation of the ‘SM 3.0’ vision as it respects SM’s own tradition and identity.”

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