Hong Kong/Seoul (CNN) BTS agency HYBE says it has called off a takeover bid for SM Entertainment, ending weeks of mudslinging that has dominated headlines in South Korea.
HYBE said on Sunday that it made its decision “after observing that the market has shown signs of overheating due to competition with both Kakao and Kakao Entertainment.”
“The company has also considered the potential negative impact on HYBE’s shareholder value,” it said in a statement to CNN.
Last week, tech giant Kakao and its entertainment unit said they had redoubled their quest to take control of SM, the iconic K-pop music agency. They sought to buy up to 35% of the music label, days after a previous share sale agreement between the two parties was blocked by a South Korean court.
Kakao offered SM shareholders 150,000 won ($115) per share, much more than HYBE’s previous offer of 120,000 won ($92) per share, which drew only mild interest from investors.
There were concerns in the industry that HYBE’s attempt to take a larger stake in SM – which is known for representing hit artists such as NCT 127, EXO, BoA and Girls’ Generation – would unfairly dominate the K-pop world. HYBE chairman Bang Si-Hyuk had denied these allegations in an exclusive interview with CNN’s Richard Quest.
HYBE currently owns 15.8% of SM. This ownership is derived from shares obtained from its tender offer and its previous ownership of 14.8% purchased last month directly from Lee Soo-man, the founder of SM and a legendary music producer widely referred to in South Korea as “the godfather to K-pop.”
In Sunday’s statement, HYBE said the price to buy SM had “exceeded the reasonable acquisition price range as competition with both Kakao and Kakao Entertainment intensified.”
Both companies have agreed to “cooperate” on issues related to their platforms in the future, it said.
SM Entertainment said in a statement that it “applauds” HYBE’s decision to suspend its takeover bid.
Kakao and its entertainment unit will continue with their existing tender offer to SM shareholders, which closes on March 26, they told CNN.
CNN’s Michelle Toh contributed reporting