SEOUL South Korea's Kakao Corp said on Tuesday it will acquire a 9.05 per cent stake in SM Entertainment, a entertainment agency behind K-pop acts like NCT and Aespa. The two will collaborate to pursue joint management projects, including global K-pop auditions, management and music distribution businesses, in an emailed statement.
Kakao Chief Investment Officer Bae Jae-hyun said the investment will help in competing in the heavily contested global music and content market.
Kakao will get 112 billion won worth of shares in SM Entertainment as well as convertible bonds worth 105 billion won, becoming the second-largest shareholder of the company when the deal is complete.
The deal will fund SM 3.0, a production centre and labels, as well as a music publishing-specialized subsidiary, according to SM Entertainment, a happy ending to speculation about a tie up dating back to May 2021.
Co-CEO of SM Entertainment, Lee Sung-su, said while explaining the strategy in a video conference uploaded on its YouTube channel, that they plan to acquire labels and invest in new businesses such as the metaverse, based on profitable financial performances.
Kakao Entertainment, Kakao Entertainment said earlier this month, had secured $955 million investment from leading sovereign wealth funds to accelerate its global growth plans.