Hybe Co. will step back from its battle with Kakao Corp to take over SM Entertainment, after competition pushed up the cost of acquiring the company.
(Bloomberg) — Hybe Co. will step back from its battle with Kakao Corp to take over SM Entertainment, after competition pushed up the cost of acquiring the company.
Hybe will discontinue the acquisition process of SM as of March 12, the company said in an emailed statement on Sunday. The decision comes after seeing signs of overheating in the market due to the competition with Kakao and Kakao Entertainment Corp., and after taking into account the potential negative impact on Hybe’s shareholder value, it said.
Hybe, the label behind boyband sensation BTS, and local internet giant Kakao have been involved in a bidding war to take over SM, pushing shares of the South Korean entertainment powerhouse to a record last week.
Kakao’s $1 Billion Offer Catapults K-Pop Agency to New Record
Hybe determined the price of acquiring SM exceeded the fair acquisition price range as competition with Kakao intensified, according to the statement. The two companies agreed to cooperate in matters related to their platforms, it said.
Kakao and its entertainment unit will continue with the tender offer to increase its stake in SM by March 26, and will boost business cooperation with both Hybe and SM, Kakao said in a separate e-mailed statement. The company plans to guarantee SM’s autonomy and independent management for its executives and staff, along with its artists and their fans, while boosting global growth.
Billionaire Hitman’s Label Targets Rival to Keep K-Pop’s Luster
SM said in a separate statement that it respects the decision, and will continue to expand shareholder returns and improve corporate values.
The development will help SM to achieve the company’s vision “moving forward to become a fan- and shareholder-centric global entertainment leader,” it said.
(Updates fifth and sixth paragraphs with comments from Kakao and SM)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.