Kakao "Aiming to Become SM's Largest Shareholder... Targeting K-Culture Synergy"

SM Officially Announces Tender Offer... "Will Guarantee Independent Operation"

Kakao announced on the 7th that it will secure the position of the largest shareholder of SM Entertainment (SM) through a public tender offer. The company aims to create synergy in the global market by combining Kakao's IT technology with SM's content.

Kakao and Kakao Entertainment released a statement on the same day, saying, "Currently, the business cooperation between SM and Kakao and the mid- to long-term growth direction of the three companies are under threat," and added, "We have determined that securing the position of the largest shareholder is inevitable to maintain the partnership stably."

To this end, they will conduct a public tender offer to purchase SM shares held by minority shareholders at 150,000 KRW per share. Kakao and Kakao Entertainment, which currently hold a 4.9% stake, aim to acquire an additional 35% through the tender offer, securing a total of 39.9%. The tender offer will be conducted from today until the 26th.

Kakao promised to respect SM's unique identity and guarantee independent operation even after becoming the largest shareholder. They plan to ensure continuous and autonomous activities of existing artists to maintain SM's core competitiveness without the departure of affiliated artists and employees.

They also emphasized successful collaboration cases in the content field, citing Kakao Entertainment and its subsidiary music label Starship Entertainment. Since joining the Kakao community in 2013, Starship Entertainment has maintained its unique musical style and strengths while growing steadily. Recently, it was recognized for its capabilities by successfully debuting the girl group ‘IVE’. In addition to the music business, it has stably established a multi-studio label system with numerous production companies in the media sector.

Kakao plans to strengthen the competitiveness of both companies in the global market by combining IT and content. Kakao is focusing investment on various technological capabilities such as artificial intelligence (AI) and the metaverse. Kakao Entertainment possesses IP business know-how based on an intellectual property (IP) value chain spanning music, story, and media across the entire entertainment sector. SM holds music and artist IPs with global influence.

A Kakao official emphasized, "By combining SM's music and artist IPs with global influence and Kakao Entertainment's IP business capabilities, we will be able to diversify IP into various fields beyond the music business, thereby enhancing global competitiveness."

They particularly look forward to the combination of various IT assets owned by Kakao and Kakao Entertainment, such as Kakao Webtoon and Kakao Page, with SM IP. SM explained that it will be able to distribute its IP more efficiently and, through this, strengthen Kakao's network capabilities. Furthermore, they added that the synergy created by combining IT and IP will present new possibilities for the K-culture industry and contribute to the overall growth of the entertainment industry.

This content was produced with the assistance of AI translation services.