K-Content News
CJ ENM seeing progress to acquire SM Entertainment
- August 27, 2021
CJ ENM seeing progress to acquire SM Entertainment
Updated : 2021-08-27 16:31
Miky Lee reportedly met with SM Founder
By Kim Jae-heun
CJ Group is seeing visible progress in its bid to acquire management rights in SM Entertainment, as the group's top executive was said to have been persuading SM's founder to hand over his stake.
Reports said CJ Group Vice Chairwoman Lee Mie-Kyung, also known as Miky Lee, visited Korea recently from the United States to meet SM Entertainment founder Lee Soo-man.
SM Entertainment, the country's top talent agency, is looking to unload 20 percent of its share including 18.72 percent owned by its founder, whose personal name Soo-man makes the initials SM in the entertainment company's name. Whoever purchases it ― now that only CJ Group and Kakao are competing against one another ― will become the largest shareholder of SM Entertainment.
Chances are high as CJ is desperate not to lose SM Entertainment to Kakao in its bidding.
Miky Lee is the most influential person in CJ Group's strategic direction in the media business. Acquiring SM Entertainment would mean creating huge synergy with its entertainment sector by utilizing intellectual property and K-pop bands owned by the entertainment agency.
However, CJ Group is expected to take some time for internal discussions on how much it is willing offer to SM Entertainment.
SM Entertainment is on track to merge with its subsidiary "LIKE Planning," which is 100 percent owned by Lee Soo-man. The total value of his share is estimated at 300 billion won ($256.9 million). Adding up 5 percent of SM Entertainment's extra share and that of LIKE Planning coming out for sale will boost the figure even bigger.
CJ plans to take over the talent agency through its media unit CJ ENM and investing over 300 billion won is not an easy decision, said sources.
"SM Entertainment will merger with LIKE Planning while selling itself off simultaneously, and if there is no big gap in adjusting the price, the deal is expected to close within two months," a source in the local investment banking industry said.
"Unless Kakao offers an unrealistic price, CJ Group is likely to win the bid."
Lee Soo-man is said to be more interested in selling its company to CJ Group, as he believes it can strengthen his company's competitiveness in the market better than Kakao.
SM Entertainment is well-known for its "ownership power," which belongs to Lee Soo-man. He is the first person to establish a K-pop entertainment firm and he has been running the business for nearly 26 years. Lee is often dubbed as the "father of K-pop" here.
As much as he loves his company, Lee decided not to pass on the management to his children, but instead to a firm that can better develop the agency.
In the meantime, even if CJ ENM and SM Entertainment agree on the acquisition deal, they will face another task of winning approval from the Fair Trade Commission.
According to the top antitrust watchdog's regulations, CJ Group and its affiliate must own between 20 percent and 40 percent of SM Entertainment's shares. This means CJ Group will have to purchase more of Lee Soo-man's shares.
By Kim Jae-heun
CJ Group is seeing visible progress in its bid to acquire management rights in SM Entertainment, as the group's top executive was said to have been persuading SM's founder to hand over his stake.
Reports said CJ Group Vice Chairwoman Lee Mie-Kyung, also known as Miky Lee, visited Korea recently from the United States to meet SM Entertainment founder Lee Soo-man.
SM Entertainment, the country's top talent agency, is looking to unload 20 percent of its share including 18.72 percent owned by its founder, whose personal name Soo-man makes the initials SM in the entertainment company's name. Whoever purchases it ― now that only CJ Group and Kakao are competing against one another ― will become the largest shareholder of SM Entertainment.
Chances are high as CJ is desperate not to lose SM Entertainment to Kakao in its bidding.
Miky Lee is the most influential person in CJ Group's strategic direction in the media business. Acquiring SM Entertainment would mean creating huge synergy with its entertainment sector by utilizing intellectual property and K-pop bands owned by the entertainment agency.
However, CJ Group is expected to take some time for internal discussions on how much it is willing offer to SM Entertainment.
SM Entertainment is on track to merge with its subsidiary "LIKE Planning," which is 100 percent owned by Lee Soo-man. The total value of his share is estimated at 300 billion won ($256.9 million). Adding up 5 percent of SM Entertainment's extra share and that of LIKE Planning coming out for sale will boost the figure even bigger.
CJ plans to take over the talent agency through its media unit CJ ENM and investing over 300 billion won is not an easy decision, said sources.
"SM Entertainment will merger with LIKE Planning while selling itself off simultaneously, and if there is no big gap in adjusting the price, the deal is expected to close within two months," a source in the local investment banking industry said.
"Unless Kakao offers an unrealistic price, CJ Group is likely to win the bid."
Lee Soo-man is said to be more interested in selling its company to CJ Group, as he believes it can strengthen his company's competitiveness in the market better than Kakao.
SM Entertainment is well-known for its "ownership power," which belongs to Lee Soo-man. He is the first person to establish a K-pop entertainment firm and he has been running the business for nearly 26 years. Lee is often dubbed as the "father of K-pop" here.
As much as he loves his company, Lee decided not to pass on the management to his children, but instead to a firm that can better develop the agency.
In the meantime, even if CJ ENM and SM Entertainment agree on the acquisition deal, they will face another task of winning approval from the Fair Trade Commission.
According to the top antitrust watchdog's regulations, CJ Group and its affiliate must own between 20 percent and 40 percent of SM Entertainment's shares. This means CJ Group will have to purchase more of Lee Soo-man's shares.
Reporter : jhkim@koreatimes.co.kr
