Patrick Frater Asia Bureau Chief Korean tech giant Kakao has gained the upper hand in the battle for control of K-pop agency SM Entertainment, after HYBE Corp., the firm behind music idols BTS, said Sunday that it had called off its takeover bid.
SM is the second largest talent Korean music talent firm and is behind music acts including Super M, Aespa, BoA and Red Velvet, Girls’ Generation, H.O.T., EXO, Super Junior, SHINee and NCT Dream.
HYBE said on Sunday that it will “discontinue the acquisition process […] after observing that the market has been showing signs of overheating due to competition with both Kakao and Kakao Entertainment,” something that it said could “damage shareholder value.” Kakao and HYBE had been locked in an increasingly bitter and high stakes battle for control of SM since the beginning of February when HYBE bought a nearly 15% stake in SM from K-pop pioneer Lee Soo-man.
Lee is estranged from the company he founded. SM hit back immediately with a plan to issue shares and convertible bonds that would have made Kakao and its subsidiary Kakao Entertainment SM’s second largest shareholder, with a 9% interest.
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