Kakao-SM File Merger Notification... Fair Trade Commission Begins Review

Kakao Acquires 38.87% of SM Shares on 28th of Last Month

The Fair Trade Commission (FTC) has initiated a merger review of Kakao's acquisition of SM Entertainment.

On the 26th, the FTC announced that it had received a merger notification for Kakao and Kakao Entertainment's acquisition of shares in SM Entertainment. As of March 28, Kakao and Kakao Entertainment had acquired a total of 39.87% of SM Entertainment's shares.

The FTC plans to examine all aspects of the merger, including horizontal, vertical, and conglomerate mergers, in Kakao's acquisition of SM. Mergers are classified as 'horizontal mergers' between companies in similar business areas, 'vertical mergers' between companies at adjacent stages in the production and distribution process, and 'conglomerate mergers' between companies in different industries.

The FTC considers Kakao's Starship Entertainment (IVE, Monsta X, etc.) and SM (aespa, etc.) idol businesses in the singer management sector as a horizontal merger. SM's music production business and Kakao's music streaming service Melon constitute a vertical merger, while SM's fan platform (DearU Bubble) and Kakao's various platforms such as KakaoTalk and Melon fall under a conglomerate merger.

The FTC stated, "Since this merger is expected to have a significant impact on the future of the K-pop entertainment industry, we plan to conduct a thorough review." The merger review period is 30 days from the date of notification and can be extended up to 90 days if necessary.

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