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Hong Kong/Seoul (CNN) South Korean internet company Kakao has become SM Entertainment’s largest shareholder, winning control of one of the country’s most iconic music institutions.
Kakao and its entertainment unit have increased their stake in SM to 39.9 percent, they said in a regulatory filing on Tuesday. Previously, the company held a 4.9% stake in SM.
Kakao buys additional stake for about 1.25 trillion won ($963) million) through a tender offer roll out earlier this month.
In seeking a controlling stake, Kakao beat rival HYBE, South Korea’s top music agency and home of boy band sensation BTS, after a bitter takeover battle.
exist In a separate filing on Tuesday, HYBE said it had sold some of its SM stake to Kakao, reducing Its stake increased to 8.8%.
Kakao CEO Hong Eun-taek acknowledged the acquisition, telling shareholders on Tuesday that the two companies will work to combine Kakao’s technological expertise with SM’s strengths in intellectual property and production skills “to amplify our collective growth”.
He added: “After the acquisition is completed quickly and amicably, we will formulate a business cooperation plan between Kakao, Kakao Entertainment and SM Entertainment and share it with our investors.”
Kakao’s increased control over SM drew attention earlier this month as it sought to secure a larger share of the music label, days after a previous stake sale agreement between the two parties was rejected by a South Korean court.
SM was founded by legendary music producer Lee Soo Man, widely known in South Korea as the “Godfather of K-pop”, who introduced the genre to mass audiences. The agency is known for representing popular artists such as NCT 127, EXO, BoA and Girls’ Generation.
aespa’s Winter, Karina, Giselle and Ningning perform on stage at the Circle Chart Music Awards in Seoul on Feb. 18. Aespa is represented by SM Entertainment.
More recently, however, it has been making headlines for a different reason: a shareholder battle.
This year, Lee has sparred with his company’s management on several fronts — including how much of the company should be sold to Kakao or HYBE.he Sell The majority of his stake was sold to HYBE for 422.8 billion won ($334.5 million) in February, giving the agency a 14.8 percent stake.
HYBE also has try to increase Its own tender offer for its stake in the company has failed to gain traction in recent weeks.
Kakao then offered SM shareholders 150,000 won ($115) per share, much higher than HYBE’s previous offer of 120,000 won ($92) per share. Then HYBE officially canceled its takeover offer.
SM’s management said it wanted to make progress with Kakao as the two parties agreed on how the agency would operate.
SM Entertainment shares rose 3.5 percent on Tuesday after the news, while Kakao shares were little changed.
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