Kakao Entertainment defends partnership deal with SM Entertainment
SEOUL, Feb. 27 (Yonhap) -- South Korean tech firm Kakao's entertainment arm said Monday its business agreement with K-pop powerhouse SM Entertainment is aimed at creating synergy between the companies and it will take measures against rival agency Hybe's alleged attempt to threaten the strategic partnership.
Kakao Entertainment Corp. issued a statement three days after Hybe, the K-pop powerhouse behind BTS and SM's largest shareholder, openly criticized a recent contract it signed with SM and warned of legal actions.
"The business partnership agreement comprehensively covers the future vision and direction pursued by Kakao, Kakao Entertainment and SM Entertainment," Kakao Entertainment CEO Kim Sung-soo said in the statement. "We plan to consult with each business to draw up a win-win structure for all companies and sign deals with fair contract terms based on it."
The contract, which reportedly gives Kakao the exclusive right to circulate SM's albums and music as well as the preemptive right to purchase new shares in SM, was made known last week amid Hybe's ongoing bid to take over SM after becoming its largest shareholder.
Kakao and SM earlier said the business agreement is aimed at using their expertise in tech, entertainment and music to roll out new K-pop artists and run global businesses.
The company refuted Hybe's claim that the clause on its preemptive right to buy SM's new shares and convertible bonds is part of anti-dilution provisions for minor shareholders to prevent their investment from potentially losing value.
"We express regret over Hybe for misinterpreting some contract terms for its own advantage and causing unnecessary confusion," Kim said. "We think it is inevitable to revise the current strategy and will actively seek all necessary measures in close consultations with Kakao."
Kakao bought a 9.05 percent stake in SM earlier this month to become its second-largest shareholder.
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