Kakao Cancels SM Entertainment Investment After Court Order

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Kakao announced it had canceled its stock purchase agreement to acquire a 9.05% stake in SM Entertainment.

Lee Soo-man, founder and chief producer of SM Entertainment speaks during at South Korean and Mongolian business leaders in Seoul at Grand Hyatt Hotel on Feb. 14, 2023 in Seoul, South Korea.HYBE’s plan to control competing K-pop company SM Entertainment and thwart a partnership with tech company Kakao took another step forward on Monday when Kakao, responding to a court injunction, announced it had canceled its stock purchase agreement to acquire a 9.05% stake in SM Entertainment.

With the injunction in place, HYBE also called for SM to exercise its right to withdraw the recommendation of the director candidate nominated by Kakao. SM had put forwardSM and HYBE are pushing competing visions for SM’s future before shareholders vote on a new board of directors at SM’s annual general meeting on March 31.

HYBE calls an SM-Kakao tie-up an “unfair partnership” that would give Kakao permanent and exclusive rights to distribute SM’s music, protect SM’s equity at the expense of other shareholders and create conflict of interests that favor Kakao. “We believe that these details demonstrate the bias and irrationality of the current SM management who approved such arrangements,”

 

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