SM Entertainment raided over market manipulation allegations in Kakao's takeover

SM Entertainment's headquarters in Seongsu District, eastern Seoul [YONHAP]

SM Entertainment was raided by the prosecution and financial authorities Tuesday over allegations that it was involved in market manipulation regarding Kakao’s purchase of the K-pop agency.

Authorities from the Financial Supervisory Service (FSS) confiscated data related to February stock trading at SM’s headquarters in Seongsu District, eastern Seoul, on Tuesday morning.

The authorities raided Kakao and Kakao Entertainment over the same issue on April 6, reported by HYBE.

Kakao and HYBE in February were locked in a takeover battle to acquire a larger proportion of shares of SM Entertainment.

HYBE accused Kakao of purposely buying a chunk of SM shares to artificially boost the stock price of SM, purposefully attempting to make HYBE’s tender offer fail.

At the time, SM share prices surpassed HYBE’s offering price of 120,000 won ($91) a piece, and HYBE's tender offer fell through.

Kakao then went on to succeed in becoming the largest shareholder of SM Entertainment last month, with a 39.87 percent stake.

“Regardless of the acquisition, the investigation into violating the capital market law continues,” the regulator said.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]