HYBE Announces Pulling Out of SM Acquisition After Reaching Cocoa Deal, SM Responds
After many adventures around SM Entertainment and the repurchase of the shares of HYBE and Kakao, a new trend reversal has just taken place.
On March 12th, HYBE announced that they had reached an agreement with Kakao regarding their very public battle for management rights and control of SM Entertainment.
In an official press release, HYBE announces:
“HYBE will suspend the process of acquiring SM Entertainment (hereafter SM) from March 12th.
HYBE believed that the market was overheated due to competition from Kakao and Kakao Entertainment and made a decision after fully considering that this could negatively impact HYBE’s shareholder value.
HYBE has determined a reasonable purchase price range considering the tangible and intangible costs that could arise in the post-merger integration of SM in the medium to long term by acquiring the shares of former general producer Lee Soo Man and carrying out a takeover bid.
However, in the current situation, where competition is intensifying due to additional takeover bids by Kakao and Kakao Entertainment, and even the stock market is showing signs of overheating, the price to be offered for the SM acquisition was deemed to exceed the reasonable range.
HYBE has made the decision to put the acquisition process on hold as proceeding with the acquisition of SM itself by issuing a counter-offer could have a negative impact on HYBE’s enterprise value and further fuel market overheating.
Due to this situation, talks have recently taken place with Kakao and the two companies have reached an overall agreement. HYBE agreed to suspend the process of acquiring management rights from SM, while agreeing on the terms of platform cooperation between the two companies. »
Shortly thereafter, SM Entertainment responded with the following statement:
“SM Entertainment will respect HYBE’s decision to halt the acquisition of SM, as agreed between Kakao and HYBE.
SM will use this agreement as an opportunity to accelerate our “SM 3.0” strategy, which we have promised to our shareholders, corporate members, fans and artists; and we will ensure that we achieve our vision for the future by taking a leap forward as a global entertainment company focused on its fans and its shareholders.
In this way, we are increasing the value of our company for all shareholders and are continuously expanding our shareholder return policy.
Kakao said in a statement today, “SM Entertainment’s greatest asset and driving force is its employees, artists and fan base; and to deliver them, we will maintain autonomous/independent operations and accelerate global growth while focusing on current management’s strategic direction and future vision, including “SM 3.0”. to be unveiled at the upcoming March 31 shareholder meeting, will create the world’s largest “IP x IT” synergy with Kakao, the optimal horizontal strategic partner, and open the “next level” of K-pop.
We would like to express our deepest gratitude to SM shareholders, fans, staff, artists and everyone who invested in this matter and supported and supported SM Entertainment to the end, even amid the unexpected confusion that followed our SM 3.0 strategy on 3 February. »
HYBE leaves the door open to Kakao to become the majority shareholder of SM Entertainment.
What do you think ?