Kakao Entertainment and Naver vie to acquire SM Entertainment shares

Kakao Entertainment and Naver vie to acquire SM Entertainment shares

South Korean online platform Naver and leading entertainment firm Kakao Entertainment seem to be competing fiercely to acquire K-content, including web novels, webtoons, and music. They are reportedly striving to take over companies through mergers and acquisitions (M&A).

Credible sources have reported that the two companies have been in competition to acquire shares in SM Entertainment lately. That is because the company that will obtain shares in the entertainment company is expected to gain an advantage in the K-pop industry. If they obtain the shares, they will be able to collaborate with several popular SM artists like EXO, SHINee, NCT, Super Junior, aespa and Red Velvet.

Kakao Entertainment has reportedly been introducing different scenarios to SM Entertainment in order to succeed in the acquisition battle. The company presented the latter a potential synergy between the two companies in the future while proposing various acquisition structures for creating suitable transaction prices. 

A strong point that Kakao Entertainment has reportedly put forth is that the company is experienced in operating and managing a record label. It has several popular artists including K.Will, WJSN, MONSTA X, and IU as its singers through their subsidiaries such as PlayM Entertainment and Starship Entertainment. It is also notable that its parent firm Kakao operates Melon, the country’s leading digital music platform. The company is also planning to be listed in the domestic stock exchange (KOSDAQ) or the U.S. exchange (NASDAQ) by next year and is inclined on increasing its corporate value before going public.

Speaking of Naver, the company also has a notable influence in the K-pop market. It has not only created the V Live app giving a glimpse of the daily lives of K-pop artists, but has also invested heavily in the artists, e.g. an investment of around USD 358 million in beNX, sub-division of Hybe Corporation. The company is also trying to upgrade its content business by targeting metaverse markets. Besides, it possesses considerable potential for M&A, such as undertaking major M&As without the assistance of external financial advisors.

Source credits: https://www.allkpop.com/article/2021/05/naver-and-kakao-entertainment-in-fierce-competition-to-obtain-shares-in-sm-entertainment