SM Entertainment shares rise above $94 as proxy fight intensifies

SM Entertainment building [Courtesy of SM Entertainment]

SM Entertainment Co. shares rallied on Wednesday, far exceeding the 120,000 won ($94) tender offer price by Hybe Co. last week as a proxy fight over the ownership of the K-pop powerhouse intensified.

Last week, Hybe signed a deal to buy 14.8 percent of shares in SM Entertainment from the latter‘s founder Lee Soo-man for 422.8 billion won and plans to buy an additional 25 percent stake from minority shareholders by March 1 at 120,000 won per share. The move, which aims to hinder Kakao Corp.’s K-pop ambition, came just days after SM and Kakao signed a separate deal, allowing Kakao to acquire a 9.05 percent stake.

SM’s share price soared by almost 10 percent to 127,900 won right after the market opened, the highest since the company’s listing in April 2000. Shares soared on expectations that not only Hybe and Kakao Group, but also CJ Group could join in the race to takeover SM.

Earlier, some media reports said that Kakao was reviewing a plan to involve CJ Group in a bid to take over SM shares, but CJ denied the reports, saying the plan is groundless.

Hybe shares gained 6.88 percent on Tuesday but fell 2.38 percent on profit taking on Wednesday. Kakao and CJ ENM shares lost 2.15 percent and 2.06 percent, respectively.