(ATTN: UPDATES with more details of agreement in paras 3-4, background info, statements from Kakao and SM Entertainment in last 9 paras; ADDS photo)
SEOUL, March 12 (Yonhap) -- Hybe, the K-entertainment powerhouse behind global superstar BTS, said Sunday it has decided to halt its bid to take over industry giant SM Entertainment in an agreement with Kakao Corp.
The tech giant Kakao and its entertainment unit, Kakao Entertainment Corp., will have management control over SM Entertainment, while Hybe will cooperate with Kakao in the platform business, Hybe said in a press release.
The company said it reached the decision as its competition with Kakao has overheated the market and could have a negative impact on the value of its stocks.
With the decision, the candidates recommended by Hybe for SM's new executive board will step down ahead of SM's regular meeting of shareholders slated for late this month.
Kakao said separately that it will continue to buy the shares of SM through March 26 as planned.
The dramatic deal came after weeks of an intensified battle between Hybe and Kakao, with the Kakao side recently having launched a tender offer.
The side offered 150,000 won (US$113.8) per share to acquire an additional 8.33 million shares in SM, with a goal to secure a combined 35 percent share.
The price is higher than the 120,000 won per share offered by Hybe earlier. The company planned to acquire a 25 percent stake through a tender offer that ended early this month, in addition to about 20 percent it has already obtained from SM founder Lee Soo-man and other shareholders. It, however, ended up purchasing only a 1 percent share in the tender offer.
As the price of SM stocks surged past the price offered by Kakao in just two days after the company made the tender offer, it and Hybe had been in negotiations to end the overheated takeover bid since Friday.
Hybe, however, did not unveil the details of its agreement with Kakao in the platform business.
It also said nothing was decided yet about the 14.8 percent stake in SM it has acquired from the SM founder Lee.
Kakao issued a press statement pledging to ensure autonomous and independent management of SM artists and help the K-pop company's growth in the global market based on its SM 3.0 future strategies.
The SM 3.0 vision unveiled by SM earlier this year is centered on establishing multiple production centers and labels, as well as seeking more business opportunities from the intellectual property rights of its artists.
SM also welcomed Friday's agreement in a statement.
"With this agreement, we'll push for the SM 3.0 strategies with speed and fulfill our future vision to become a global entertainment company centered on fans and shareholders," the statement said.