Although Kakao is on pace to become the largest shareholder of SM Entertainment via a tender offer, experts believe that the partnership with the entertainment agency might help strengthen Kakao’s worldwide profile by capitalizing on the popularity of SM Entertainment musicians.
HYBE renounced its attempt to acquire SM Entertainment and will now collaborate with Kakao, the company stated on Sunday. The corporation has not yet determined what it will do with its present 14.8% shareholding.
Kakao is presently seeking to purchase 39.9 percent of SM Entertainment through the tender, where it is asking for 150,000 won per share. The tides have changed in Kakao’s favor. The promotion is good through March 26.
If successful, the technology business will become the largest stakeholder of the agency that formed NCT and aespa.
The acquisition of SM Entertainment might aid Kakao Entertainment’s IPO.
“Kakao and Kakao Entertainment must purchase a firm with intellectual property in order to develop internationally,” said Shinhan Securities analyst Ji In-hae. It is anticipated that the synergy between KakaoTalk and Dear U Bubble, a fan community service owned by SM Entertainment, would aid in worldwide expansion.
Domestic monthly active users (MAU) for KakaoTalk in the fourth quarter of 2022 were 47.78 million. In comparison, the MAU overseas was 5.7 million.
“The fan platform is a perfect answer for Kakao’s current position,” said Daol Investment & Securities analyst Kim Ha-jeong. The entertainment industry has the greatest potential for international development.
Weverse, HYBE’s fan community service, has an MAU of 8.4 million in the fourth quarter of 2022, while 70 percent of Dear U Bubble’s income is earned internationally.
“Suppose KakaoTalk adds a new tab on its app for the fan platform. The global fanbase of SM Entertainment will use KakaoTalk to interact with its performers. The influx of new worldwide users can create significant synergy between Kakao’s content business and its core business, BizBoard, according to the analyst.
“Kakao Entertainment’s IPO, which has been in the limelight since it acquired SM Entertainment, is simply the tip of the iceberg in terms of the company’s potential,”
The acquisition of SM Entertainment is anticipated to have an immediate impact on the webtoon and web novel industries.
“HYBE collaborated with Naver to develop webtoon and web book series based on its performers, including BTS, Enhypen, and Future X Together. BTS’s webtoon ‘7Fates: Chakho’ was simultaneously launched worldwide in ten languages, becoming more popular internationally than domestically, and garnering more than 15 million views in just two days after its publication.
In nations such as the United States and Southeast Asia, where Kakao is still a relative newcomer, the Story cooperation with SM Entertainment might have a promotional effect.
According to sources, the acquisition of SM might give Kakao with the opportunity to partner with HYBE as well. Kakao and HYBE have not specified the areas in which they would collaborate.
Kakao and Kakao Entertainment control 4.9% of SM Entertainment already.
Kakao and SM Entertainment revealed their intention to collaborate on the creation of “SM 3.0” last month, which entails removing Lee Soo-influence man’s from the company.
Kakao stressed that it will ensure the agency’s independence with regard to artists and fans and accelerate its worldwide expansion.
Under the terms of the agreement, Kakao obtains broad distribution rights for SM Entertainment artists.