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News

Kakao Gains Control of SM Entertainment, a Major Player in K-Pop

Giselle
Last updated: 2023/04/01 at 3:21 PM
Giselle 3 Min Read

Kakao, a South Korean online corporation, has overtaken SM Entertainment as the largest shareholder after winning the fight for control of one of the most recognizable music labels in the nation.

Kakao and its entertainment division boosted their ownership of SM to 39.9%, they disclosed in a regulatory filing on Tuesday. The company had previously owned 4.9% of SM. Through a tender offer made available earlier this month, Kakao paid around 1.25 trillion Korean won ($963 million) for the extra shares.

Kakao has successfully become the largest shareholder of SM Entertainment, by securing 39,9% (Kakao 20.78%, Kakao Entertainment 19.13%) of SM stake. https://t.co/aRkYq0FuKC #KoreanUpdates VF pic.twitter.com/eYVrJ80zGV

— KoreanUpdates! (@KoreanUpdates) March 27, 2023

After a bloody takeover war, Kakao defeated rival HYBE, South Korea’s most prominent music agency and home to boy band sensation BTS, to win a controlling stake. In a separate Tuesday filing, HYBE said it had sold some of its SM shares to Kakao, reducing its stake to 8.8%.

Kakao Gains Control of SM Entertainment
Kakao Gains Control of SM Entertainment

In a statement to shareholders on Tuesday, Kakao CEO Hong Eun-taek recognized the acquisition and stated that the firms will combine their strengths—production SM’s and intellectual property know-how and Kakao’s technological know-how—”to increase our joint growth.”

“After the swift and amicable completion of the acquisition, we will form the business cooperation plans between Kakao, Kakao Entertainment, and SM Entertainment and share them with our investors,” he added.

You may also read:

  • Jungkook of BTS is the New Worldwide Ambassador for Calvin Klein
  • How Kakao won HYBE to Takeover K-Pop Pioneer SM Entertainment

A few days after a South Korean court rejected an earlier deal between the two parties to sell shares in their respective companies, Kakao raised concerns earlier this month by intensifying its efforts to acquire control of SM.

Lee Soo-man, a renowned music producer generally regarded in South Korea as “the godfather of K-pop” for popularizing the genre, created SM. Hit performers represented by the firm include Girls’ Generation, EXO, BoA, and NCT 127. Recently, though, shareholder disputes have caused it to garner media attention for a different reason.

This year, Lee has fought with his company’s management on several fronts, including how much of the business should be sold to Kakao or HYBE. He gave HYBE a 14.8% stake when he sold most of his holdings to the company in February for 422.8 billion Korean won ($334.5 million).

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By Giselle
Giselle's writing explores themes of identity, family, and love, and she has a keen ability to capture the nuances of human relationships with depth and sensitivity. Her prose is both poetic and precise, creating a rich and immersive reading experience for her audience.
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