CJ Group Is Considering The Acquisition Of SM Entertainment, Joining Hands With Kakao
CJ Group has made an official statement.
The battle between Lee Soo Man and his former company, SM Entertainment, is getting bloody. After Lee Soo Man announced plans to sue the company, he enlisted the help of founder Bang Si Hyuk. HYBE then confirmed that it was considering the acquisition of a stake in SM Entertainment. This was a huge blow to the current management of SM Entertainment and Kakao, who recently bought shares in the firm. Now, CJ Group is joining the war.
It was recently reported on February 14, 2023, that CJ Group is considering an acquisition of SM Entertainment after receiving a suggestion from Kakao. According to IB and entertainment industry insiders, they are discussing the conditions proposed by Kakao regarding their participation in the acquisition of shares in SM Entertainment.
They plan to buy up 19.9% of the shares together to make them the largest shareholder. The VP of Kakao’s investment team, Bae Jae Hyun, and the VP of CJ Holdings, Lim Kyung Mook, are leading the charge.
Align Partners, the capital management firm involved in the mess, had sided with Kakao given their business relationship together, and expressed its negative stance on HYBE’s bid price for the shares, considering it too low given the company’s future value.
CJ Group’s subsidiary, CJ ENM has actually been eyeing SM Entertainment’s shares acquisition since early 2021, when Lee Soo Man was first announced to be selling his stakes. They pulled out when Lee Soo Man requested to maintain his existing role at the company despite the sales.
The acquisition, if successful, would boost CJ Group’s position in the industry. They are known to have the largest comprehensive network in entertainment in Korea, but it lacks intellectual property (IP) involving artists and K-Pop.
However, only time will tell as CJ ENM’s financial situation is on the decline. Their cash ratio decreased from 63.9% to 31.2% in the past year. Still, as a large company, they could possibly raise funds or receive loans for the matter.
Watch this space for more updates on the battle between HYBE and Lee Soo Man vs. Kakao, SM Entertainment, Align Partners, and now possible CJ Group.
The article has been corrected to reflect the accurate umbrella company involved in reports of acquisition.
