HYBE halts SM Entertainment acquisition after coming to an agreement with Kakao

HYBE has suspended the SM Entertainment acquisition after coming to an agreement with Kakao. On March 12, HYBE announced that it is discontinuing its process of acquiring a high stake in SM Entertainment. The highly public battle between HYBE and Kakao has finally ceased, with the two companies agreeing to "cooperate on platform-related matters" in the future.

As per Soompi, last month, HYBE offered a deal to Lee Soo-man, SM's founder, to buy out a 14.8 percent stake in the company to become its biggest shareholder. The deal was immediately followed by Kakao's approach to acquiring a 9.05 percent stake in the company by buying newly issued shares and convertible bonds, however, that did not happen.

Lee Soo-man denounced the acquisition of bonds and shares, deeming the process illegal, and took the issue to court, eventually getting his injunction granted.

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HYBE stops the SM Entertainment acquisition after carefully studying the market

After SM banned the issuing of new shares and bonds, Kakao delivered another offer to the existing shareholders. They put forward a tender offer of $962 million, comparatively higher than what HYBE offered, to hold the biggest stake in the company.

On the heels of the event, it was reported that HYBE and Kakao have now come to a mutual agreement, resulting in HYBE taking a step back from SM's acquisition. As per a press release, BTS' agency has made the decision after carefully studying the market.

The release stated:

"HYBE made this decision after observing that the market has been showing signs of overheating due to competition with both Kakao and Kakao Entertainment.”

The agency added:

“HYBE contemplated the possibility that this acquisition, along with the tender offer, may harm [HYBE] shareholder value and fuel overheating of the market, in making the decision.”

As of now, HYBE and Kakao have come to a mutual agreement and are looking forward to working in harmony on platform-related matters in the future.

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Ever since HYBE showed interest in acquiring a stake in SM Entertainment, the employees of the latter have been criticizing HYBE for their unethical objectives behind the merger.

More than 200 employees of SM Entertainment also shared a joint statement, sharing their thoughts on the decision while claiming that they will always protect the legacy of the company.

However, SM Entertainment will now have a different future, with Kakao planning to develop new synergies based on its own IT expertise and SM's global IP and production system.