HYBE, CJ and Kakao compete to acquire Lee Soo Man’s stake in SM

HYBE, CJ and Kakao compete to acquire Lee Soo Man’s stake in SM

South Korea-based entertainment companies namely HYBE Corporation, CJ Entertainment, and Kakao Entertainment are reportedly in the race to acquire the shares of Lee Soo Man in SM Entertainment.

Lee Soo Man is apparently the largest shareholder, who owns an 18.73% stake in SM. Following the acquisition of his stake, the new shareholder will gain the management rights of the entertainment company.

Sources familiar with the matter have reportedly cited that Kakao, CJ, and HYBE have recently proposed to acquire SM Entertainment. The three companies are seemingly presenting favorable scenarios to win the acquisition battle. According to SM’s statement, the company has been conducting several discussions on equity investment and business partnership. However, it has not finalized any of the business agreements as yet.

Kakao Entertainment, which is the frontrunner to obtain SM’s stake, has reportedly proposed to acquire the company and its management rights at more than 2.5 trillion won (around $2.2 billion). CJ can threaten Kakao’s opportunity, however, as Lee Mi Kyung, the company’s Vice Chairman, has decided to return to Korea and discuss the potential acquisition deal with Lee Soo Man. On the other hand, HYBE, another strong candidate, has offered a higher sum than Kakao, but its initial proposal was declined by Lee Soo Man.

According to industry representatives, the upcoming acquisition amount is likely to increase from nearly 2.5 trillion won ($2.2 billion) to 4 trillion won ($3.5 billion) at most. It has also been speculated that foreign investors including Morgan Stanley are competing to raise their shares in SM.

As the Q2 performance of SM Entertainment is predicted to go beyond expectation, its market value is expected to be high. For the record, the company’s stock price surged by 6,400 won (around $5.60), while the shares are trading at 69,100 won (around $60.44).