Stock prices of SM falls 4% due to controversy over contract with Kakao Ent.

▲ This photo shows SM Entertainment logo. (Yonhap)

SEOUL, Feb. 24 (Yonhap) - As the business cooperation contract between SM Entertainment and Kakao have became controversial, stock price of SM Ent. has fallen 4% on Friday, with two days left until the HYBE’s  tender offer ends.

On Friday, KOSDAQ market ended with a single stock of SM Entertainment at 121,000 won, which is 4.20 percent lower than its price on Thursday, barely exceeding HYBE’s tender offer price (120,000 won).

HYBE is undergoing a tender offer for SM’s shares until the 28th.

Subsidiaries such as SM C&C (-2.91%), SM Life Design (-3.05%), DearU (-6.85%), and KEYEAST (-3.69%) showcased decrease in stock prices.

HYBE has announced that the contract signed between SM and Kakao includes ▲ Kakao having priority to SM's new shares or stock-linked securities ▲ Kakao Entertainment's acquisition of unlimited exclusive rights to SM domestic and foreign music ▲ Kakao Entertainment's management of SM artist in North and South America ▲ Kakao Entertainment's overall control on performance and fan meeting distribution.

According to HYBE, "The contract will not be able to prevent unequal scenarios for ordinary shareholders, and the value of shares may continue to be diluted for the rest of shareholders except for Kakao," adding "SM has handed over important business rights to Kakao Entertainment without a period limit."

(This article is translated from Korean to English by Yunhee Cho.)

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