HYBE, led by Chairman Bang Si Hyuk, has announced the suspension of the acquisition process for SM Entertainment.
Earlier today, HYBE stated that the market had become overheated due to the competitive structure with Kakao and Kakao Entertainment. They added that this decision was reached after carefully considering the potential negative impact it could have on HYBE’s shareholder value.
HYBE had initially established an acquisition price range for SM Entertainment, factoring in the value of the company from a mid- to long-term perspective, as well as the tangible and intangible costs that could arise during the post-merger integration process. The company then proceeded with a tender offer and acquired shares from the former SM general producer, Lee Soo Man.
According to the report, it was deemed that the price for acquiring SM Entertainment exceeded the appropriate range, given the current circumstances where the competitive landscape is intensifying due to the additional tender offer by Kakao and Kakao Entertainment, and the stock market is showing signs of overheating.
“We made the decision to stop the takeover process considering the fact that pursuing the acquisition of SM even while conducting a counter tender offer could have a negative impact on HYBE’s shareholder value and further fuel the overheating of the market,” HYBE said.
In this scenario, HYBE had been in discussion with Kakao since the 10th regarding the management rights of SM Entertainment, and the two companies ultimately reached a broad agreement. As a result, HYBE halted the process of taking over SM’s management rights, and simultaneously agreed upon ways to collaborate on platforms between the two companies.
Consequently, HYBE and Kakao will not be entitled to vote at the upcoming 28th SM Regular Shareholders’ Meeting, which is scheduled to take place on the 31st.