K-pop powerhouse SM Entertainment has denied recent media reports that its biggest shareholder, internet firm Kakao, is either planning to overhaul leadership at the company or to sell off its stock. Management at both SM and Kakao have "effectively communicated" and are now fully focused on collaboration and synergies, an official statement insisted.
Kakao also put out a statement late last month claiming that the rumours it is planning on selling its SM shares are not true. In its statement earlier this week, SM itself added that “several media outlets have reported that top-level SM executives might be replaced, but Kakao is not considering doing so - we have effectively communicated with Kakao regarding the matter".
“Kakao, Kakao Entertainment and SM Entertainment are opting for co-growth and to collaborate on businesses to create synergies", the statement concluded, according to Korea JoongAng Daily.
The involvement of Kakoa in SM has been pretty eventful ever since it decided it wanted a sizable stake in the K-pop firm. SM's founder Lee Soo-man was against any deal that allied his company with Kakao’s own entertainment division, instead proposing an alliance with HYBE, best known as the home of BTS.
As a result, Kakao ended up in a very public bidding war with HYBE, which it ultimately won. Though Kakao was subsequently accused of misconduct during that bidding war, with its Chief Investment Officer Bae Jae-hyun facing allegations that he violated South Korea's Capital Market Act by purchasing over $180 million worth of SM stock in a bid to inflate the company's share price.
Then in December, Kakao launched its own investigation into SM's financial statements, with the internet firm reportedly concerned that SM management had closed deals without its consent. Several computers used by SM execs were confiscated as part of that investigation.
As the rumours began to circulate last month that Kakao might be about to bail on SM entirely, there were reports that HYBE was again considering a possible bid, most likely in partnership with a private equity company. However, if the recent statements reaffirming Kakao's commitment to SM are true, that won't happen.