CJ Denies Rumors About Teaming Up With Kakao To Become SM Entertainment's Top Shareholder

CJ Group has officially shut down the rumors that it will be joining forces with Kakao in a bid to become the top shareholder of SM Entertainment.

Last week, Kakao became the second-largest shareholder of SM Entertainment after acquiring a 9.05 percent stake in the company—a move that SM Entertainment founder Lee Soo Man has since denounced as illegal. The acquisition came just days after SM Entertainment’s current CEO Lee Sung Su (who is Lee Soo Man’s nephew) and COO Tak Young Jun announced their vision for a newly restructured “SM 3.0,” which involved cutting ties with longtime producer Lee Soo Man.

After the announcement, Lee Soo Man flew back to Korea and announced that he would be taking legal action against SM Entertainment for violating the Commercial Act by illegally issuing new shares of the company and convertible bonds during a management dispute. Then, on February 10, HYBE signed a deal with Lee Soo Man to acquire a 14.8 percent stake in SM Entertainment, making it the largest shareholder of the company.

On February 14, it was reported that Kakao had reached out to CJ Group with a proposal to work together in acquiring shares of SM Entertainment. The reports claimed that in order to counter the new HYBE-Lee Soo Man partnership, the two conglomerates were planning to acquire a combined total of 19.9 percent of SM Entertainment’s shares.

However, later that evening, CJ Group officially denied that it was discussing such a proposal from Kakao with its subsidiaries. The conglomerate stated, “[The reports] are groundless.”

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