Hybe drops takeover bid for SM Entertainment after talks with Kakao

Hybe drops takeover bid for SM Entertainment after talks with KakaoHybe drops takeover bid for SM Entertainment after talks with Kakao
via Hybe, Kakao, SM
South Korean entertainment company Hybe has pulled out of its takeover bid for SM Entertainment. 
The K-pop agency behind acts such as BTS, LE SSERAFIM, SEVENTEEN and NewJeans announced its decision in a statement on Sunday after talks with SM Entertainment and competing acquirer Kakao Corp
Hybe said it chose to halt its acquisition of SM “after observing that the market has been showing signs of overheating due to competition with both Kakao and Kakao Entertainment,” noting that going forward may have a “potential negative impact on Hybe’s shareholder value.”
While Hybe initially sought to acquire SM Entertainment founder Lee Soo-man’s shares, it has now “determined that the price of acquiring SM exceeded the fair acquisition price range as the competition with both Kakao and Kakao Entertainment intensified.”
Hybe said it and Kakao also “agreed to cooperate on matters related to their platforms” in the future during their talks.
Following Hybe’s discontinuation of its acquisition, SM Entertainment released its own statement and expressed that it will push forward with its “3.0” business strategy. 

SM Entertainment’s strongest assets and driving force are its employees, artists, and fandoms; and in order to respect them, we will maintain autonomous/independent operations, and we will accelerate global growth with a focus on the current management’s strategic direction and vision for the future, including “SM 3.0.”

These latest developments come shortly after internet giant Kakao and its subsidiary Kakao Entertainment made a nearly $1 billion offer to acquire up to 35% of SM Entertainment shares, which, if successful, would make it the K-pop company’s largest shareholder at 40%. 
Hybe had completed its acquisition of Lee Soo-man’s shares and a further 0.98% stake via minority shareholders, currently giving it 15% in SM Entertainment, falling short of its targeted 25% shareholder amount. 
SM Entertainment swiftly expressed its ire toward Hybe’s acquisition attempt, with its co-CEOs releasing videos calling it a “hostile takeover.” Co-CEO Chris Lee, who is Lee Soo-man’s nephew, accused his uncle of engaging in years of offshore tax evasion and meddling in the company’s music releases so they would align with his personal and financial interests.

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