This article was published on June 12, 2025, at 2:33 p.m. on the ChosunBiz MoneyMove site.
Two months have passed since the speculation about the sale of Kakao Entertainment emerged, but there have been no interested buyers. The hopeful corporate value is approaching 11 trillion won, making the sale difficult, yet the company is said to still prioritize a full sale.
Even if Kakao Entertainment gives up on the idea of a full sale and turns to partitioning the sale, industry insiders forecast that there will be little interest except for certain business units. Among the sale items, SM Entertainment is considered the most popular, but currently, there seem to be no suitable candidates to acquire even SM.
According to investment banking (IB) industry sources on the 12th, Kakao Entertainment has been seeking buyers since April, but the situation remains challenging. The company is reportedly pursuing this on its own without any sale advisory firm.
An industry insider said, “Kakao Entertainment publicly denies the sale, but due to financial investors (FIs), they cannot refrain from selling and are seeking potential buyers,” adding, “However, excluding SM Entertainment and the Melon division, there is little attractiveness.”
As of the end of last year, major FIs of Kakao Entertainment included Anchor Equity Partners (12.42%), Government of Singapore Investment Corporation (GIC·5.1%), and the Public Investment Fund (PIF·5.1%) of Saudi Arabia. Tencent of China also holds 4.61%. The largest shareholder is Kakao, which holds a 66.03% stake.
The most likely candidate for sale within Kakao Entertainment is SM Entertainment. Riding on the K-pop wave, it has recorded outstanding performance. In the first quarter of this year, SM Entertainment's sales reached 230 billion won, showing strong figures following last year's same period (220 billion won). Operating profit during the same period was 32.6 billion won, doubling the level of 15.5 billion won from the previous year.
If Kakao Entertainment shifts towards partitioning the sale of SM Entertainment, it appears that they will bundle the equity owned by Kakao and Kakao Entertainment together for the management rights sale.
Currently, Kakao holds 21.6% equity in SM Entertainment, while Kakao Entertainment holds 19.9%. Industry insiders explain that if only Kakao Entertainment's equity is put up for sale, it would be unattractive due to it being a minority stake, meaning they ultimately need to sell it bundled with Kakao's share.
In the meantime, various candidates for the acquisition of SM Entertainment have been mentioned in the market. Competitor and financially strong HYBE, along with KRAFTON, which has significant cash but struggles with limits on single intellectual property (IP), have been cited.
However, in the case of HYBE, due to its past defeat in competing with Kakao over SM Entertainment, its will has almost vanished, and recent judicial risks surrounding Chairman Bang Si-hyuk have reportedly made the possibility of acquiring SM Entertainment virtually 'zero (0)'.
Recently, market analysts interpret the sale of its 9.66% equity in SM Entertainment to Tencent of China as an expression of 'no interest in acquisition whatsoever.'