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South Korean prosecutors said on Wednesday that they have filed an stay warrant for Brian Kim , the founder of Korean internet giantKakao , as part of an investigation into alleged descent market place manipulation come to to a high - profile bidding war forSM Entertainment , one of the country ’s big music label , in 2023 .
The warrant comes a week after Seoul - based prosecutor launch a probe into Kim ’s interest in the alleged manipulation of SM Entertainment ’s share Mary Leontyne Price .
Kakao did not reply to a request for comment ahead of publication .
In March 2023 , Kakao and Kakao ’s underling , Kakao Entertainment , became the controlling shareholder in SM Entertainmentafter winning a bidding warfare for a 39.9 % post in the K - pop recording label . Kakao was competing with Hybe , the owner of South Korean medicine representation BigHit , know for signing the democratic K - pop boy band , BTS . Kakao had launched a cutter offer to buy SM Entertainment ’s ploughshare at 150,000 KRW ( $ 115 ) each , eclipsing an earlier legal tender pass by Hybe price at 120,000 KRW ( ~$87 ) per share .
A tender offer is when a ship’s company goes right away to a target society ’s shareowner to buy their share within a set period . The objective of a tender fling is normally to take ascendence of the target company , and the success of such an offer often depends on the buyer hold a certain percentage stake .
Korean prosecutors mistrust that the monetary value of SM Entertainment ’s shares was manipulated right before the deal was unsympathetic . Kakao isreportedlyaccused of purchasing KRW 240 billion ( approximately $ 174 million ) of SM Entertainment ’s share over 553 swop in February 2023 . That allegedly drove the troupe ’s share Mary Leontyne Price above Hybe ’s tender offer cost of 120,000 KRW per share , which caused Hybe to withdraw its offer .
Kakao is also accused of not reporting the large stock purchase to financial authorisation .
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Kakao ’s principal investiture military officer , Jae - Hyun Bae , wasarrestedlast October following allegations of stock price use after the coup . He is presently on run .
Founded in 2006,Kakaois one of South Korea ’s biggest internet business firm . It operates democratic messaging religious service Kakao Talk , on - demand hack overhaul Kakao Mobility , on-line banking platform Kakao Bank , music swarm service Melon and comics hosting platform Kakao Webtoon .
If Kakao ’s chief investing officeholder and other executives at Kakao Entertainment are found to be in violation ofSouth Korea ’s Capital Markets Actand incur bigger penalty than a mulct , the land ’s fiscal governor could compel Kakao to strip at least 10 % of its ownership in its online banking subsidiary , Kakao Bank .
accord to South Korea ’s online banking regulations , for have more than 10 % of the ballot rights in Mobile River - only Sir Joseph Banks , non - financial companies must not have offend financial natural law , such as the Capital Markets Act , or reasonable trade wind laws in the last five years .
