Kakao Counters HYBE with a 1.25 Trillion KRW (951 million USD) tender offer for SM Entertainment

Kakao has made a tender offer to invest up to 1.25 trillion KRW (~951.8 million USD) to secure an additional 35% stake in SM Entertainment on top of the 5% they own.

The Korean tech giant Kakao announced on March 7 that it will be offering to purchase 8,338,461 shares of SM Entertainment at 150,000 KRW (114.45 USD) per share so that they can acquire 35% of SM. The closing date for the tender offer is March 26.

The tender offer price is 15.3% higher than the previous day's closing price, which was at 130,100 KRW (99.05 USD). Kakao currently owns a 4.91% stake in SM, and if the tender offer is successful, Kakao will own a total of 40%, becoming the biggest shareholder in SM Entertainment, far ahead of HYBE (19.43%). 

Meanwhile, HYBE announced the previous day that it had secured 233,817 shares of SM through a tender offer. It is far short of the original target of 5,951,925 shares, and in accordance with the Capital Markets Act, HYBE will not be able to acquire SM's shares through block deals (block trading after hours) for six months.