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Kakao is considered one of the strongest candidates to acquire stakes in SM Entertainment. The entertainment unit of the internet company is hoping to make use of the talent agency's intellectual property (IP) to take on its staunch rival, Naver.
According to The Korea Times, in the event that Kakao Entertainment is able to buy shares in SM Entertainment, it will be able to feature the company's big Kpop talents, including Super Junior, EXO, aespa, NCT, and more in its original content lineup. This will eventually allow Kakao to embark on the global OTT business.
The Seoul-based talent agency, which is also home to TVXQ, Girls Generation, Shinee, and Red Velvet, also runs Dear U, an information technology unit that has a goal of becoming a leader in the metaverse platform service globally. Kakao thinks that Dunamu, its crypto exchange affiliate, can form a synergy with Dear U in the NFT (non-fungible token) business.
Kakao and SM Entertainment have previously confirmed that they are in talks for a business partnership and investment in shares, but nothing has been finalized yet. There is no solid decision with any kind of business as of this time.
An official from Kakao said, "We are reviewing various ways to collaborate with SM Entertainment, but no specific details have been confirmed."
It was learned that CJ ENM is also interested in the purchase of shares in SME, and it has also entered talks about this last year. However, the companies failed to negotiate the sell-off price, and Kakao took over CJ ENM's place in the list of candidates.
The current sell-off price for SME was estimated to be between ₩600 billion or around $491.2 million and ₩1 trillion or $810 million. The stake for sale is said to be owned by the company's founder, Lee Soo Man, and consists of an 18.72% share and management rights.
Meanwhile, The Korea Economic Daily reported that Kakao Entertainment and SME are already in the final stages of talks for the acquisition of a controlling stake in the talent agency. It was predicted that the sale will proceed because Kakao accepted most of SM's requests.
