Hybe to sell SM shares to Kakao following failed takeover bid

SEOUL, March 24 (Yonhap) -- Hybe, the K-entertainment powerhouse behind global superstar group BTS, said Friday it will sell off all of its 15.78 percent stake in SM Entertainment to Kakao Corp. after its bid to take over the rival entertainment agency fell through.

Hybe said in a regulatory filing that it will sell 3.75 million shares in SM Entertainment for 563.5 billion won (US$436.8 million) by joining an open tender bid by Kakao, which offered 150,000 won per share.

Hybe said it "decided to sell some or all of the held shares after participating in (Kakao's) public stock purchase after withdrawing its bid to acquire SM's management rights."

Kakao aims to secure a combined 35 percent share in SM by Sunday to become its largest shareholder.

However, Hybe is not likely to sell all of its shares in SM through the tender bid because shares are proportionally assigned to the buyer if stock offerings exceed Kakao's target of 35 percent.

Hybe last month bought 14.8 percent of SM's shares from SM founder Lee Su-man for 422.8 billion won amid a heated bidding war against Kakao, but on March 12 announced its decision to halt its takeover bid following an agreement with Kakao.

Hybe said it agreed to cooperate with Kakao in the platform business, while Kakao will have management control over SM Entertainment.