Criticism for participating in the tender seems inevitable
Possible to secure 1 trillion won in M&A live ammunition… Continue the expansion strategy by investing in foreign label companies
(Seoul = Yonhap Infomax) Reporter Park Kyung-eun and Kim Hak-seong = As Hive responded to Kakao’s tender offer for SM Entertainment shares, it took reputational risks in the market.
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As a result, Hive made a ‘return rate’ of 25% in one month, because strong public opinion criticized that disposing of holdings through a tender offer would deprive minority shareholders of the opportunity to recover their investment.
Hive announced on the 24th that it would dispose of its 15.8% stake in SM Entertainment through a tender offer.
It is planned to sell a total of 3,757,237 stocks, and if all the shares are subject to a tender offer, you can grab 563.5 billion won in cash. As a result, Hive earns up to 112 billion won in market profit.
Last month, Hive secured a 14.8% stake from Soo-man Lee, former general producer of SM Entertainment, at 120,000 won per share, and this month, it held a tender offer at the same price as the acquisition unit price and he also bought a 0.98% stake.
On the 12th, Hive, which was reviewing a buyback, agreed with Kakao not to participate in the acquisition of SM Entertainment. Later, Hive changed the purpose of investment in SM Entertainment to a simple investment purpose.
Since then, opinions have been divided regarding the disposal of SM Entertainment stocks owned by Hive.
In order to maximize the profit of its shareholders, it is reasonable to respond to the tender offer, but considering the meaning of the tender offer system and the progress that Hive has shown so far, prospects have been raised that it will consider other options.
This is because the tender offer system was introduced for the purpose of sharing a control rights premium with minority shareholders when a company acquires control rights.
Considering the purpose of the system, the opinion is that it is not right for Hive, which is SM Entertainment’s largest shareholder and a party to the takeover battle that has been going on until this month, to participate in the tender offer.
This is because if Hive, the main shareholder, participates in the tender offer, competition will increase, and minority shareholders may lose the opportunity to recover their investment.
In addition, Hive mentioned the essence of the tender offer system when he bought SM Entertainment shares for 120,000 won in the past.
At the time, Hive explained, “We will take over the stake in SM Entertainment and at the same time increase the profits of minority shareholders.”
The industry analyzes that Hive made a tender offer to avoid the short-term trading profit earnings system.
Article 172 of the Capital Markets Act regulates related transactions through the entrant’s short-term trading profit system, but through the enforcement decree, participation in tender offers is applied as an exception to avoid being affected by the regulations this.
In addition, Hive is expected to be able to secure approximately 1 trillion won in investment by selling its stake in SM Entertainment through Kakao’s tender offer.
In the industry, as Chairman Bang Shi-hyeok is emphasizing the expansion of overseas business capabilities, it is expected that the money secured by giving up the takeover of SM Entertainment will be invested in overseas M&A.
Hive is not only a foreign label, but also blockchain and artificial intelligence… This is because it continues to invest in IT-related areas such as games to expand the scope of its business.
Kim Hyun-yong, a researcher at Hyundai Motor Securities, said, “From Hive’s point of view, I think it would have been better in the long run to stay as the second largest shareholder of SM Entertainment in order to maintain control of Kakao, which has come to’ r obvious as a strong competitor.” There seems to be a burden,” he said.
He added, “The picture of platform cooperation between Hive and Kakao is not clear now.”
gepark@yna.co.kr
hskim@yna.co.kr
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