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Wednesday, March 22, 2023

Korea’s Kakao Corp to buy 9.05% stake in SM Entertainment, promote K-pop project

Korea’s Kakao Corp to buy 9.05% stake in SM Entertainment, promote K-pop project

SEOUL, Feb 7 (Reuters) – South Korea’s Kakao Corp (035720.KS) said on Tuesday that it would acquire a 9.05% stake in SM Entertainment (041510.KQ)an entertainment agency that supports K-pop artists including NCT and Aespa, is involved in a deal worth 217.2 billion won ($172.8 million).

Kakao said in an emailed statement that the two will join forces on joint management projects, including global K-pop auditions, management and music distribution business.

Bae Jae-hyun, Kakao’s chief investment officer, said: “Through this investment, we hope to compete together in the fiercely competitive global music and content market.”

The move will allow Kakao to acquire 112 billion won worth of shares and 105 billion won worth of convertible bonds in SM Entertainment, making Kakao the company’s second largest shareholder after the deal is completed.

SM Entertainment described the deal as a “happy conclusion” to collaboration speculation dating back to May 2021, and said the funds raised through the deal will fund its new business strategy called “SM 3.0” — — Simultaneously establish multiple production centers and record companies as professional subsidiaries of music publishing.

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“Based on the profitable financial performance brought about by (our) intellectual property, we plan to acquire record labels and invest in new businesses such as Metaverse,” SM Entertainment co-CEO Lee Sung-soo said in a video explaining the strategy at the meeting. uploaded to its YouTube channel on Friday.

Earlier this month, Kakao said its subsidiary Kakao Entertainment had secured $955 million in financing invest From a leading sovereign wealth fund to accelerate its global growth plans.

($1 = 1,255.9300 won)

Reporting by Hyunsu Yim; Editing by Kim Coghill, Tom Hogue and Lincoln Feast.

Our standards: Thomson Reuters Trust Principles.

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