Kakao shareholders frustrated by protracted battle over SM

• Published date: 09 March 2023
• Publication title: The Korea Times

Shareholders of Kakao are expressing frustration after the internet company launched a tender offer earlier this week aiming to purchase a 35 percent stake in SM Entertainment. Investors are questioning whether taking over SM's management rights will help boost Kakao's plunging stock price.

According to the Korea Exchange, shares of Kakao closed at 59,000 won, Thursday, down 0.17 percent from the previous day. After hitting 71,300 won on Feb. 9, the stock price of the tech giant began a continuous plunge since HYBE announced its deal to take over SM founder Lee Soo-man's stake. Kakao's stock price fell by 16.64 percent in value in only a month.

The plunge is frustrating shareholders who were expecting an upward trend seen from the beginning of the year to continue. Kakao's stock price rose to 170,000 won in 2021, but fell sharply to 46,500 won last October before recovering early this year.

In contrast, SM shareholders have enjoyed a rally amid heated market expectations as Kakao announced the plans for its tender offer. SM's share price rose for six consecutive sessions since Feb. 28. But the upward movement stopped, Thursday, with the stock closing at 154,900 won, down 2.27 percent from the previous session.

Kakao is expected to suffer more since its ambitious tender offer is likely to fail, with SM's stock price on Wednesday soaring above 150,000 won per share ? the price that Kakao suggested for its tender offer.

Since the stock price is showing no signs of a rebound, Kakao shareholders are expressing frustration and criticizing management for investing too much money to take over an entertainment company.

"I'm not sure whether SM's stocks...