HYBE-Kakao war over SM enters 2nd round

• Published date: 06 March 2023
• Publication title: The Korea Times

Kakao planned to hold an emergency board meeting on Monday evening, industry sources say, to discuss how to respond to the fast-developing situation surrounding its de facto battle with HYBE to win the management rights to SM Entertainment.

The saga surrounding the fight between the corporate giants has been unfolding at breathless speed since last month.

In the latest development, the big tech's plan to strengthen its partnership with SM Entertainment by securing a 9.05 percent stake was crushed last Friday. The local court granted an injunction requested by SM founder Lee Soo-man, who filed for legal action in early February to stem Kakao's acquisition of the sizeable stake.

Following the court decision last Friday, SM Entertainment announced on Monday in its regulatory filing that it officially revoked a contract with Kakao to issue new shares and convertible bonds to the big tech. The entertainment firm explained that the move is to abide by the court ruling.

On Monday, HYBE seemed to take the upper hand as it called on SM to immediately drop its previous deal to form a strategic business partnership with Kakao. The global K-pop powerhouse that produces BTS also urged SM to rescind its board member recommendation appointed by Kakao, demanding SM respond by Thursday this week.

Kakao's next move?

The ball is back in Kakao's court. Market watchers are focusing on whether Kakao would step out of the current war while embracing its defeat in the fight over SM's management rights or simply fight harder against HYBE.

Some view that Kakao would launch its tender offer to acquire a major stake in SM Entertainment, offering a higher price than HYBE's tender offer price of 120,000 won ($92)...