Kakao reaches 40% stake in K-pop agency SM, HYBE keeps 8.8% (updated)

SM Entertainment Co

28/03/2023 08:02

(Recasts with HYBE's possible losses)
    By Hyunsu Yim
       SEOUL, March 28 (Reuters) - South Korean social media
giant Kakao has reached a 40% stake in K-pop agency SM
Entertainment  041510.KQ , the target said on Tuesday, in a deal
that left former bidder HYBE  352820.KS  stuck with more than
half of its stake in SM.
    HYBE, the manager of hit boy band BTS, had hoped to sell its
entire 15.8% stake into a tender offer from Kakao Corp
 035720.KS  and affiliate Kakao Entertainment after losing a
battle for control of the pioneering K-pop agency.
    But Kakao's tender offer for a 35% stake at 150,000 won per
share attracted acceptances for more than double the targeted
stake, forcing it to scale back allotments in proportion.
    HYBE said it was left with a 8.81% stake in SM, which closed
at 94,300 won on Tuesday afternoon, leading to a paper loss of
about 4.2 billion won  ($3.23 million), according to Reuters'
calculation. 
    It had bought its stake for 120,000 won per share, mostly
from SM founder Lee Soo-man, who is considered the "godfather"
of the K-pop industry.
    If HYBE had been able to sell its entire stake into Kakao's
offer, it stood to pocket a gain of around $87 million, a 25%
quick return from an investment made just a month ago.
    HYBE plans a substantial number of acquisitions and
investments this year as the K-pop giant looks to boost its U.S.
presence, its chairman Bang Si-hyuk said this month.
    SM is home to popular K-pop groups such as Girls'
Generation, H.O.T., EXO, Red Velvet, Super Junior, SHINee, NCT
Dream and Aespa.
($1 = 1,298.9400 won)

 (Reporting by Hyunsu Yim and Joyce Lee; Editing by Muralikumar
Anantharaman and Jamie Freed)
 ((joyce.lee@tr.com;))