BTS´ HYBE says it will discontinue acquisition process of SM Entertainment

Seoul: K-pop supergroup BTS´ management agency HYBE said Sunday it will discontinue its acquisition process of rival SM Entertainment, ending a weeks-long fight for management rights over the company.

HYBE has been competing with South Korean internet giant Kakao after purchasing a nearly 15 percent stake in SM from its founder Lee Soo-man last month, which prompted the company´s shares to more than double in a month.

"In light of recent developments, HYBE discussed the matters with Kakao and reached an agreement to suspend the process of acquiring SM´s management rights," the agency said in a statement.

It cited the "potential negative impact" on HYBE´s shareholder value as well as the fact that the recent competition with Kakao had fueled "overheating of the market" as reasons, adding the price of acquiring SM had exceeded the fair acquisition price range.

"Concurrently, the two companies agreed to cooperate on matters related to their platforms," the company said.

SM welcomed the decision and thanked shareholders, fans, employees and artists for their support "throughout the unexpected turmoil over the past few weeks".

SM was founded by Lee Soo-man, who is widely referred to as "the godfather of K-pop" and credited for producing key figures in an earlier generation of artists such as BoA, Girls´ Generation and TVXQ, which paved the way for the industry´s current success.

But hints of a power struggle eked out when SM´s co-CEOs -- including Lee´s nephew Lee Sung-soo -- announced new plans for the company that notably excluded him, which led to the founder´s sale of his shares to HYBE.

The move made HYBE the single largest shareholder in SM Entertainment. But SM´s management contended that it amounted to a hostile takeover that would create a HYBE monopoly and damage the K-pop industry´s massive potential.

In a bid to wrest back control, SM´s management brought in South Korea´s Kakao.

The cash-rich tech conglomerate owns the country´s most popular messaging app and had been seeking to buy a controlling share of the company to block HYBE.

SM is scheduled to hold a shareholder meeting on March 31. (AFP)