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| Kakao headquarters on Jeju Island / Korea Time file |
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| Kakao CEO Hong Eun-taek |
Kakao's high-tech IT value chain distribution channels will be combined with SM Entertainment's extensive intellectual property (IP), leading to mutually beneficial business expansion, the company CEO said Tuesday.
Kakao and its entertainment subsidiary Kakao Entertainment together acquired a 39.87 percent stake in SM Entertainment, a leading local cultural content agency.
The vision outlined during the general shareholders meeting is the conclusion of weeks of hostile takeover attempts, sustained largely by tender offer moves led by two Kakao entities.
The Kakao firms offered to buy over 8.33 million SM shares, or 35 percent of the total SM shares issued, at a per share price of 150,000 won ($115). Over 18.88 million shareholders, accounting for 80 percent of the SM shares in the market, sought to take up on the offer, raising the competition ratio to 2.26:1.
The full purchase of offered shares pushed the stakes held by Kakao and Kakao Entertainment up to 20.76 percent and 19.11 percent, respectively, up from the previous 3.27 percent and 1.63 percent. It cemented the two Kakao entities as the largest shareholder of SM.
"SM's competent management in IP production capabilities will be bolstered further by Kakao's IT and IP value chain distribution channels," Kakao CEO Hong Eun-taek said during a press conference at the firm's headquarters on Jeju Island. "We will share future growth strategies with investors as soon as the ongoing acquisition deal is closed."
A fire at a data center that caused days of service disruption last October is only one among many headwinds the firm faced in the recent past, with many more expected to come this year, he added.
"2023 will be a year where Kakao takes a closer look into a slew of shortcomings that were left unaddressed and unresolved, as outshined by rapid growth over the past decade," he said. "Included are corporate governance structure, culture and broader management issues ― matters that must be reviewed for us to seek true growth."
