Kakao Entertainment Defends Partnership Agreement With SM Entertainment Following HYBE Statement
Following the successful acquisition of SM Entertainment, HYBE slammed a recent partnership the K-pop agency had with South Korean tech giant Kakao.
Earlier this month, Kakao said it had acquired a 9.05% stake in SM, making it the company’s second-largest shareholder after founder Lee Soo-man.
HYBE later announced that it had reached an agreement to acquire a 14.8% stake in SM from Lee, becoming its largest shareholder.
On February 24th, HYBE commented on the partnership between SM and Kakao, saying that it would “take all necessary legal action” against the agreement. ” After learning the contents of the business contract, we were both surprised and concerned« , and explained by HYBE.
“Compared to the substantial commercial rights that SM is giving away, what he gets in return is disproportionately small.” and added HYBE. « We believe this contract undermines SM’s shareholder value, limits the rights of SM artists and limits the future of SM employees. »
On Feb. 27, Kakao responded, saying that her deal with K-pop powerhouse SM Entertainment was aimed at creating synergies between the companies and that she would be taking action against rival agency Hybe’s alleged attempt to threaten the strategic partnership .
“The Business Partnership Agreement comprehensively covers the future vision and direction being pursued by Kakao, Kakao Entertainment and SM Entertainment,” Kim Sung-soo, CEO of Kakao Entertainment, said in the statement.
“We plan to develop a win-win structure for all companies with each company and, based on this, to conclude agreements with fair contractual conditions. »
The deal, which would give Kakao exclusive rights to distribute SM’s albums and music, as well as first refusal to buy new shares in SM, was announced last week as part of Hybe’s upcoming bid to acquire SM after it became its largest shareholder had become .
Kakao and SM previously said the deal aims to leverage their expertise in technology, entertainment and music to launch new K-pop artists and run global businesses.
The company has denied Hybe’s claim that its pre-emption clause to purchase SM’s new shares and convertible debentures is part of anti-dilution provisions for underage shareholders to prevent their investment from depreciating.
“We regret that Hybe misinterpreted certain terms of the contract to its advantage and created unnecessary confusion.” said Kim. “We believe it is inevitable to revise the current strategy and will actively seek any necessary action in close consultation with Kakao. »
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