Kakao Entertainment and Naver are competing against each other to get one of the "Big 4" company's shares.
Keep on reading to know more.
Kakao Entertainment and Naver Compete to Take Over SM Entertainment's Shares
Kakao Entertainment and Naver are competing to acquire K-content, such as webtoons, web novels, and music. Above all, there is fierce competition in the mergers and acquisitions market. For example, when Naver bought the Canadian reading app Wattpad, Kakao Entertainment will preoccupy the global territory by acquiring the North American app Radish.
It is expected that whoever wins the acquisition for SM Entertainment's shares will be able to gain an advantage within the K-Pop market, as they will be able to collaborate with various popular artists such as EXO, NCT, Red Velvet, aespa, and more. Recently, NCT DREAM's "Hot Sauce" album has been topping music charts, including Japan's Oricon weekly chart.
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In addition, SM Entertainment's rookie girl group, aespa, recently released their new song, "Next Level," which is climbing the ranks in Billboard's Global 200. The group is also attracting attention for combining metaverse in their concept, which is becoming a hot topic within the market. It is expected that aespa's collaboration with the IT powers, such as Kakao Entertainment or Naver, will have a positive effect on expanding aespa's worldview through various formats.
According to reports, Kakao Entertainment is presenting various scenarios to SM Entertainment in order to win the shares against Naver. In order to create a satisfactory transaction price, Kakao Entertainment proposed multiple acquisiton structures, while showing in detail the two companies' potential synergy effect it will exhibit in the future.
Another strong point that Kakao Entertainment presented is having experience managing and operating a label, with popular artists such as K.Will, MONSTA X, IU, and Cosmic Girls, through affiliated labels including Starship Entertainment and PlayM Entertainment. In addition, the parent company, Kakao, operates Melon, the nation's top digital music platform.
Kakao Entertainment also plans to go public in the domestic (KOSDAQ) or U.S. (NASDAQ) stock market early next year and is currently focusing its efforts on increasing its corporate value.
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Naver is also evaluated to having a significant influence in the K-Pop market. Not only has it provided V-Live, which allows K-Pop stars to connect with fans, but it has also aggressively invested in artists. To further prove their case, Naver had invested 400 billion won ($358 million) in beNX, a subsidiary of HYBE (formerly Big Hit Entertainment), this year. Naver plans to solidify a three-party alliance with HYBE and YG Entertainment.
Recently, Naver is also making efforts to enhance its content business structure, such as targeting the metaverse market through its subsidiary, Naver Jet. Another advantage is Naver's own merger and acquisition capabilities by being able to conduct major mergers and acquisitions without outside financial advisors.
Interest is also being drawn on the impact of the acquisition of shares on SM Entertainment's share price. The share price of SM Entertainment, which has been fluctuating in the high 20,000 won (approximately $18) range, surpassed 40,000 won ($36) with the recent increase in album sales and earnings. On May 26, it had a closing price of 42,250 won ($38) and a market capitalization that is close to 1 trillion won ($896 million).
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Kakao Entertainment is also showing its willingness to invest in SM Studios, which will be launched on May 28. It is also considering making a joint investment with China's Tencent. It is expected that SM Entertainment will see an increase in its bargaining power through integrated management in the fields of drama, entertainment, and new media.
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Written by Robyn Joan
