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Court Blocks K-Pop Agency SM’s Share Sale to Kakao

  • SM is determined to develop partnership with Kakao, CFO says
  • Hybe alternative seen as unfavorable for shareholder value
Bloomberg business news
Kakao Offers to Buy 35% of K-Pop Label SM to Fend Off Rival Hybe
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A South Korean court blocked SM Entertainment Co.’s planned share sale to internet giant Kakao Corp., scuppering the company’s favored plan and opening the door to a takeover of SM by BTS label Hybe Co.

The Seoul Eastern District Court ruled in favor of SM founder Lee Soo-man and barred Kakao’s deal to buy 9% of SM, SM said in a regulatory filing Friday. SM last month agreed to issue new shares and convertible bonds to Kakao in a move that would have made the messaging-app operator its second-largest shareholder, diluting Lee’s hold over the company.