Kakao-SM vs HYBE Dispute
Kakao "Complete Strategy Overhaul"
HYBE "State Your Position on Management Participation"
SM "HYBE Obstructing Treasury Stock Cancellation"
Sharp exchanges continue between HYBE and Kakao over the acquisition of SM Entertainment. Kakao, which had been reserved in its comments, officially announced its position and joined the competition for SM acquisition.
Kakao: "We Will Explore All Necessary Measures"
On the 27th, Kim Sung-soo, Co-CEO of Kakao Entertainment, expressed regret toward HYBE in a statement. He refuted HYBE’s claim that the business cooperation agreement between Kakao and SM "damages SM’s shareholder value," stating that it is not true.
He added, "On the 21st, HYBE expressed that collaboration with Kakao was possible regarding the three-party business cooperation agreement, but on the 24th, they suddenly reversed their position and instructed SM Entertainment’s management to halt all detailed decision-making related to the main contract."
He continued, "HYBE is recommending board members composed solely of their personnel, denying both the existing management and the direction they established. This threatens the very existence of the partnership with SM and fundamentally infringes on the three parties’ mid- to long-term growth strategies. We can no longer just watch this situation unfold. We plan to actively explore all necessary measures," he warned sharply.
HYBE: "Kakao, Clarify Your Position on Management Participation"
HYBE immediately responded to Kakao’s official statement.
HYBE argued, "Rather than Kakao Entertainment maintaining an ambiguous stance alongside its parent company, the major domestic platform company Kakao, it is a responsible action to clarify whether this is a declaration of management participation instead of business cooperation with SM, thereby reducing uncertainty for capital market participants."
At the same time, HYBE emphasized, "Our position that we can fully consider Kakao Entertainment’s business proposals if they help SM’s business remains unchanged, assuming Kakao has no interest in management participation."
HYBE also attacked Kakao Entertainment’s recommendation of Jang Yoon-jung, Global Strategy Officer (GSO) of Kakao Entertainment, as a candidate for SM’s non-executive director, calling it "a conflict of interest." HYBE stated, "Since Kakao Entertainment’s executive effectively oversees the distribution organization, this creates a conflict of interest structure that would limit SM artists’ negotiating power."
Furthermore, HYBE repeatedly pointed out that Kakao Entertainment’s preferential negotiation rights for SM’s new shares damage shareholder value and cannot be seen as a horizontal cooperative relationship.
SM: "HYBE, Stop Interfering with Our Share Buyback"
The mudslinging battle among HYBE, SM, and Kakao is intensifying. SM claimed that HYBE is obstructing its share buyback and cancellation.
SM stated, "Based on the recently established SM 3.0 strategy and business plan, we planned to use approximately 63.5 billion KRW, the estimated producing royalties to be settled with former major shareholder Lee Soo-man over the next three years, entirely for share buyback and cancellation."
They added, "HYBE is pressuring the securities firm designated to manage SM’s share buyback trust, causing delays in the trust contract for share buyback intended to benefit all shareholders."
SM criticized, "HYBE is forcing SM to revert to a company solely for the major shareholder, as in the past, by obstructing SM’s shareholder return policy aimed at fairly sharing profits with all shareholders. We urge HYBE to stop forcing SM to serve only the major shareholder or opposing for the sake of opposition, and to explain what measures HYBE envisions to enhance shareholder value for SM’s shareholders."
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