SM Entertainment shares drop 23% after HYBE ends acquisition

SM Entertainment headquarters in Seongdong District, eastern Seoul, on March 7 [YONHAP]

SM Entertainment shares fell 23.48 percent to 113,100 won ($86.67) Monday after HYBE pulled out from the battle to take over the entertainment agency. Kakao and HYBE shares closed higher.

SM Entertainment shares opened at 135,000 won, down 8.66 percent from Friday's close, and plunged throughout the session to end below HYBE's tender offer price of 120,000. Some SM Entertainment subsidiaries also fell, with SM C&C down 9.98 percent and SM Life Design Group down 5.74 percent.

Retail investors sold 45.9 billion won of SM stock, while foreign investors bought in 43.6 billion won and institutional investors 1.4 billion.

The share price for Kakao, which is offering to acquire 35 percent of SM Entertainment shares at 150,000 won per share until March 26, jumped 4.65 percent to close at 60,800 won.

HYBE climbed 3.21 percent to 189,600 won.

The month-long battle involving a series of written and video statements came to an end after HYBE announced in a statement on Sunday that it is halting the acquisition process for SM Entertainment and is giving up on the competition, which raised the acquisition cost above the "appropriate" price.

HYBE said the decision came as the competition against Kakao to acquire SM Entertainment overheated the market and raised concerns harming the interests of shareholder.

The agency has withdrawn its nominees for SM Entertainment's board.

BY SOHN DONG-JOO [sohn.dongjoo@joongang.co.kr]