SEOUL, South Korea (CelebrityAccess) — South Korean financial regulators have reportedly raided the headquarters of SM Entertainment Corp over suspicions that the South Korean technology conglomerate Kakao Corp. manipulated stock prices while jockeying for ownership of the company with rival Hybe Entertainment.
According to the Korea Times, South Korea’s Financial Supervisory Service launched an investigation into the company following a petition from Hybe. At the time, both Hybe, the K-pop agency behind some of the nation’s biggest stars such as BTS, and South Korean telecom Kakao were engaged in a bidding war for SM Entertainment, which represents K-pop acts such as Aespa, Girls Generation, and NCT.
In their petition, Hybe alleged that Kakao manipulated SM Entertainment’s stock price through a third company to make it difficult to submit a tender offer, the Korea Times reported.
On March 28th, Kakao announced that it had secured the winning bid, taking an almost 40% stake in SM Entertainment and becoming the largest shareholder of the company.
The transaction appeared to be controversial within the company at the time, with SM Entertainment’s board of directors seemingly at odds with company founder Lee Soo-man, who appeared to favor Hybe as a potential partner in the sale.
Hybe initially acquired a 14.8 percent stake in SM Entertainment from Lee Soo-man, who also successfully sought a legal injunction to block Kakao’s bid in early February.
“For me, ‘The Best’ was HYBE. Although they were in competition with SM, the success of BTS is the pride of all of our people,” Lee said in a statement provided to Reuters in early March.
Howver, SM Entertainment’s board of directors favored Kakao as a suitor for the company and in a statement to CNN, described Hybe’s offer as a “hostile takeover” bid.
SM Entertainment did not immediately respond to a request for comment.
