Kakao Vs. CJ Vs. HYBE — The ₩4 Trillion KRW Battle To Acquire SM Entertainment

SM Entertainment has been in discussions with various companies regarding an acquisition plan that could take as much as ₩4 trillion KRW (about $3.48 billion USD) to secure, and a new dark horse in CJ has entered the discussion to acquire SM Entertainment.

According to an exclusive report from Hankook Kyungjae, CJ Group (the conglomerate that houses CJ ENM, CJ Entertainment and many more companies) has entered the conversation to acquire SM Entertainment as a dark horse, with Kakao still the front runner and HYBE still in the running as well. All three companies are reportedly still working on developing various plans and scenarios in hopes of being selected as the acquirer of SM Entertainment.

SM Entertainment has simply stated that they are holding various discussions relating to their future business partnerships and equity investments, but nothing has been confirmed yet. Regardless of the company that they may end up joining hands with, there are certainly in depth conversations going on between SM Entertainment and the various companies looking to acquire it.

Kakao is still the front runner to acquire SM Entertainment, and their most recent proposal to acquire SM Entertainment and its management rights valued the company at around ₩2.5 trillion KRW (about $2.17 billion USD). Much of the discussion between Kakao and SM Entertainment is between Kakao’s chairman Kim Bum Soo and Lee Soo Man. However, CJ ENM is the dark horse that can threaten Kakao’s acquisition hopes, as CJ ENM vice-chairman Miky Lee has reportedly decided to return to Korea to meet with Lee Soo Man and discuss the potential acquisition. HYBE reportedly offered more money than Kakao, but that initial proposal was rejected by Lee Soo Man.

Insiders predict the acquisition cost will rise from ₩2.5 trillion KRW (about $2.17 billion USD) up to ₩4 trillion KRW (about $3.48 billion USD), and foreign investors including Morgan Stanley are working to try to increase their stake in SM Entertainment prior to the acquisition. Currently, SM Entertainment has a market capitalization of ₩1.38 trillion KRW (about $1.20 billion USD). However, it is believed that SM Entertainment’s stock prices are undervalued, and SM Entertainment continues to perform well in both domestic and foreign markets.