Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>Today (22 February), S.M.Entertainment Co (041510 KS) provided a detailed analysis of the strategic partnership with Kakao from shareholders and fans perspectives.</li>
<li>The timing of this detailed strategic partnership announcement is a bit unusual since it comes BEFORE the actual tender offer announcement and potential capital injection into SM Entertainment by Kakao.</li>
<li>Our call on this M&amp;A remains consistent. In the last week of February/early March, Kakao could make a tender offer at prices of at least 140,000/150,000 won, in our view.</li>
</ul>


Today (22 February), S.M.Entertainment Co (041510 KS) provided a detailed analysis of the strategic partnership with Kakao from shareholders and fans perspectives.
The timing of this detailed strategic partnership announcement is a bit unusual since it comes BEFORE the actual tender offer announcement and potential capital injection into SM Entertainment by Kakao.
Our call on this M&amp;A remains consistent. In the last week of February/early March, Kakao could make a tender offer at prices of at least 140,000/150,000 won, in our view.


SM Entertainment: Provides a Detailed Analysis of a Strategic Partnership with Kakao

<ul>
<li>In this insight, we discuss our thoughts on S.M.Entertainment Co (041510 KS) management's official response on why it is opposing HYBE (352820 KS)'s tender offer offer.</li>
<li>Currently, about 85% of SM's employees oppose HYBE's proposed acquisition of nearly 40% stake in SM Entertainment. </li>
<li>In the last week of February/early March, Kakao Group could make an official tender offer at prices of at least 140,000/150,000 won, in our view.</li>
</ul>


In this insight, we discuss our thoughts on S.M.Entertainment Co (041510 KS) management's official response on why it is opposing HYBE (352820 KS)'s tender offer offer.
Currently, about 85% of SM's employees oppose HYBE's proposed acquisition of nearly 40% stake in SM Entertainment. 
In the last week of February/early March, Kakao Group could make an official tender offer at prices of at least 140,000/150,000 won, in our view.


SM Entertainment Mgmt's Response on Its Opposition to HYBE's Tender Offer

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
<a href="https://www.smartkarma.com/entities/s-m-entertainment-co" target="_blank" data-smartkarma-citation="entities:3500:1" rel="noopener">S.M.Entertainment Co (041510 KS)</a> is trading through the partial offer terms as <a href="https://www.smartkarma.com/entities/hybe-co-ltd" target="_blank" data-smartkarma-citation="entities:28959:1" rel="noopener">HYBE (352820 KS)</a> and <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a> jostle for control.</li>
<li>The political noise around the Adani Group situation will continue to be significant. Part of India believes this is a hatchet job against PM Modi and the BJP.</li>
<li>
<a href="https://www.smartkarma.com/entities/star-entertainment-group-ltd" target="_blank" data-smartkarma-citation="entities:926:1" rel="noopener">Star Entertainment Group (SGR AU)</a> is an extraordinarily toxic company. But just how much negative news is already baked into the share price?</li>
</ul>



S.M.Entertainment Co (041510 KS) is trading through the partial offer terms as HYBE (352820 KS) and Kakao Corp (035720 KS) jostle for control.
The political noise around the Adani Group situation will continue to be significant. Part of India believes this is a hatchet job against PM Modi and the BJP.

Star Entertainment Group (SGR AU) is an extraordinarily toxic company. But just how much negative news is already baked into the share price?


Last Week in Event SPACE: S.M.Entertainment, Adani Group, Star Entertainment, Dai Nippon, Citizen

<ul>
<li>It has been reported that Kakao has hired local brokerage firms to discuss the details of another tender offer of SM Entertainment shares (at more than 130,000 won).</li>
<li>We believe that this has been the key reason why SM Entertainment's shares rose an additional 5% on 15 February.</li>
<li>We believe that eventually Kakao Group will win the M&amp;A fight for SM Entertainment and shares of SM could rise further in the coming weeks. </li>
</ul>


It has been reported that Kakao has hired local brokerage firms to discuss the details of another tender offer of SM Entertainment shares (at more than 130,000 won).
We believe that this has been the key reason why SM Entertainment's shares rose an additional 5% on 15 February.
We believe that eventually Kakao Group will win the M&amp;A fight for SM Entertainment and shares of SM could rise further in the coming weeks. 


Who Wants SM Entertainment More? Kim Bum-Soo (Kakao) Or Bang Si-Hyuk (Hybe)?

<ul>
<li>In a move to counter Lee Soo-man's influence, <a href="https://www.smartkarma.com/entities/s-m-entertainment-co" target="_blank" data-smartkarma-citation="entities:3500:1" rel="noopener">S.M.Entertainment Co (041510 KS)</a> intends to issue new shares (9.05% on a fully diluted basis) to <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>.</li>
<li>Lee, with 18.4% in SM, responded by selling 14.8% to SM's rival <a href="https://www.smartkarma.com/entities/hybe-co-ltd" target="_blank" data-smartkarma-citation="entities:28959:1" rel="noopener">HYBE (352820 KS)</a>. HYBE concurrently announced a tender offer for an additional 25%, at ₩120,000/share, a 22% premium.</li>
<li>Kakao and SM are less than impressed. But these developments are a power grab for the pioneer of K-pop.</li>
</ul>


In a move to counter Lee Soo-man's influence, S.M.Entertainment Co (041510 KS) intends to issue new shares (9.05% on a fully diluted basis) to Kakao Corp (035720 KS).
Lee, with 18.4% in SM, responded by selling 14.8% to SM's rival HYBE (352820 KS). HYBE concurrently announced a tender offer for an additional 25%, at ₩120,000/share, a 22% premium.
Kakao and SM are less than impressed. But these developments are a power grab for the pioneer of K-pop.


K-Pop Battle: HYBE's Tender Offer For S.M. Entertainment:

South Korea

S.M.Entertainment Co. plans, produces, promotes, and markets Korean rock and roll music in several formats, such as compact discs (CD), concert tours, television productions, and music videos.  The Company also operates artist management business as well as licensing and copyright business from the company's music records.

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S.M.Entertainment Co (041510 KS)

SM Entertainment: Provides a Detailed Analysis of a Strategic Partnership with Kakao

Today SM Entertainment provided a detailed analysis of the strategic partnership with Kakao. The timing of this announcement is unusual since it...

Douglas Kim

SM Entertainment Mgmt's Response on Its Opposition to HYBE's Tender Offer

In this insight, we discuss our thoughts on S.M.Entertainment Co (041510 KS) management's official response on why it is opposing HYBE (352820...

Douglas Kim

Last Week in Event SPACE: S.M.Entertainment, Adani Group, Star Entertainment, Dai Nippon, Citizen

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Who Wants SM Entertainment More? Kim Bum-Soo (Kakao) Or Bang Si-Hyuk (Hybe)?

It has been reported that Kakao has hired local brokerage firms to discuss the details of another tender offer of SM Entertainment shares (at more...

Douglas Kim

K-Pop Battle: HYBE's Tender Offer For S.M. Entertainment:

Trading tight at a 2.3% gross spread to terms. HYBE may bid higher. So could Kakao. Either buy here to play the partial tender offer; or for...

David Blennerhassett

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