HYBE to discontinue acquisition of SM Entertainment after discussion with Kakao

nme.com:

HYBE is ceasing its acquisition of SM Entertainment, the K-pop company announced today (March 12), after a discussion with competitor Kakao.In a press statement, HYBE said it decided to suspend the acquisition after a discussion with tech giant Kakao. “The two companies agreed to cooperate on matters related to their platforms,” it added.HYBE made the decision, it said, “after observing that the market has been showing signs of overheating due to competition with both Kakao and Kakao Entertainment”.

It added, “The company has also taken into account the potential negative impact on HYBE’s shareholder value.”The announcement comes just over a month to the day that HYBE first announced that it had struck a deal with SM’s former chief producer Lee Soo-man to buy his shares and become a majority stakeholder in competing K-pop label SM.In today’s statement, HYBE said it “acquired former Chief Producer Lee Soo-man’s shares and made the tender offer based on a fair acquisition price range, considering the long-term value of SM, and all costs that may arise during the post-merger integration process”.“However, HYBE determined that the price of acquiring SM exceeded the fair acquisition price range as the competition with both Kakao and Kakao Entertainment intensified.

HYBE contemplated the possibility that this acquisition, along with the tender offer, may harm shareholder value, and fuel overheating of the market, in making the decision.”HYBE’s bid to acquire SM was met with fierce opposition by SM’s leadership and staff, who characterised the move as a “hostile takeover”.