Kakao can end K-pop saga with near-$1 bln mic drop

SM Entertainment Co

07/03/2023 04:04

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
       HONG KONG, March 7 (Reuters Breakingviews) - Kakao
 035720.KS  is stepping up to the stage. South Korea's $22
billion internet conglomerate has emerged as a white knight in
the bitter takeover battle of SM Entertainment  041510.KQ 
against rival music label, Hybe  352820.KS , best known for
managing global boy-band sensation BTS. 
    Kakao and its entertainment arm are eyeing a 35% stake in SM
via a tender offer worth $962 million. The bid comes less than a
week after Hybe's lower offer backfired, as it bought just 1% of
the shares, falling short of a 25% goal. If Kakao succeeds, the
company, which has the backing of SM's management, would become
the label's top shareholder.
    It's unlikely $6 billion Hybe can sustain a bidding war.
Kakao Entertainment in January raised $930 million from
investors including GIC in Singapore and Saudi Arabia's Public
Investment Fund. The envisioned partnership between Kakao, Kakao
Entertainment and SM would cover global distribution, production
and more for music and other content. 
    Following Kakao's offer, SM Shares rallied 14% to 148,400
won ($114); they have nearly doubled since the start of the
year. Shareholders can look forward to this high-note ending.
(By Robyn Mak)
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($1 = 1,297.5000 won)

 (Editing by Antony Currie and Katrina Hamlin)
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