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

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<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:

<ul>
<li>On 20 January, SM Entertainment announced that Lee Chang-Hwan, the CEO of Align Partners Capital will join the company as a board member. </li>
<li>This will mark one of the first cases of an activist investor becoming a board member of a Korean company which already has a major shareholder.</li>
<li>We believe that Lee Chang-Hwan (CEO of APCM) joining SM Entertainment as a board member will have a positive impact on the company to meaningfully improve its corporate governance.</li>
</ul>


On 20 January, SM Entertainment announced that Lee Chang-Hwan, the CEO of Align Partners Capital will join the company as a board member. 
This will mark one of the first cases of an activist investor becoming a board member of a Korean company which already has a major shareholder.
We believe that Lee Chang-Hwan (CEO of APCM) joining SM Entertainment as a board member will have a positive impact on the company to meaningfully improve its corporate governance.


Align Partners' Lee Chang-Hwan Joins SM Entertainment as a Board Member

<ul>
<li>This past week, I had a discussion with Changhwan Lee, the founder and CEO of Align Partners which is currently an activist investor on S.M.Entertainment Co (041510 KS).</li>
<li>This insight provides the details of why Align Partners is going activist on SM Entertainment. </li>
<li>Through more successful proxy fights such as SM Entertainment, there could be greater value that could be unlocked from many listed companies in Korea with poor corporate governance. </li>
</ul>


This past week, I had a discussion with Changhwan Lee, the founder and CEO of Align Partners which is currently an activist investor on S.M.Entertainment Co (041510 KS).
This insight provides the details of why Align Partners is going activist on SM Entertainment. 
Through more successful proxy fights such as SM Entertainment, there could be greater value that could be unlocked from many listed companies in Korea with poor corporate governance. 


A Discussion with Align Partners' CEO on SM Entertainment

<ul>
<li>After the market close today, S.M.Entertainment announced that its Chairman Lee Soo Man will end the contract with Like Planning, a contents producing company owned by Lee Soo Man.</li>
<li>We estimate that S.M.Entertainment has paid more than 160 billion won to Like Planning in the past 10 years.</li>
<li>By ending the relationship between Chairman Lee Soo Man and Like Planning, this should have a major positive impact on S.M.Entertainment shares in the coming weeks. </li>
</ul>


After the market close today, S.M.Entertainment announced that its Chairman Lee Soo Man will end the contract with Like Planning, a contents producing company owned by Lee Soo Man.
We estimate that S.M.Entertainment has paid more than 160 billion won to Like Planning in the past 10 years.
By ending the relationship between Chairman Lee Soo Man and Like Planning, this should have a major positive impact on S.M.Entertainment shares in the coming weeks. 


S.M.Entertainment - Chairman Lee Soo Man to End Contract with Like Planning (A Big Catalyst!)

South Korea

YG Entertainment Inc., produces and markets music recording, music publishing, record manufacturing/sales, artist management, concert production, and new artist discovering/training.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

YG Entertainment (122870 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

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

Align Partners' Lee Chang-Hwan Joins SM Entertainment as a Board Member

We believe that Lee Chang-Hwan (CEO of APCM) joining SM Entertainment as a board member will have a positive impact on the company to meaningfully...

Douglas Kim

A Discussion with Align Partners' CEO on SM Entertainment

This past week, I had a discussion with Changhwan Lee, the founder and CEO of Align Partners which is currently an activist investor on...

Douglas Kim

S.M.Entertainment - Chairman Lee Soo Man to End Contract with Like Planning (A Big Catalyst!)

By ending the relationship between Chairman Lee Soo Man and Like Planning, this should have a major positive impact on S.M.Entertainment shares in...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)