Executive of South Korea's Kakao arrested over share purchases

SM Entertainment Co

19/10/2023 08:47

SEOUL, Oct 19 (Reuters) - An executive of South Korea's
Kakao Corp  035720.KS  was arrested on Thursday for suspected
stock manipulation during its acquisition of K-Pop agency SM
Entertainment  041510.KQ , sending its shares down 3.1% by the
close.
    The Seoul Southern District Court approved a warrant for the
arrest of the social media giant's chief investment officer, Bae
Jae-hyun, citing concern about possibility of evidence
destruction and flight risk.
    Bae has denied wrongdoing, saying it was a legitimate stock
purchase on the market. Kakao spokespeople could not be
immediately reached. 
    Kakao had competed with HYBE  352820.KS , the management
agency parent of K-Pop supergroup BTS, to acquire a controlling
stake in SM Entertainment early this year. 
    Now Kakao and affiliate Kakao Entertainment together control
about 40% stake in SM. 
    Prosecutors said they suspected Bae and other Kakao
executives of inflating SM Entertainment's share price above
HYBE's tender offer price by investing about 240 billion won,
and failing to report its stake during the course of the
takeover war. 
    The wider market  .KS11  closed down 1.9%. 
    

 (Reporting by Joyce Lee)
 ((joyce.lee@tr.com;))