Industry official reveals Kakao SM acquisition is stalled due to Lee Soo-man's demands

Article: What are his terms?...Kakao's acquisition of SM stalled because of Lee Soo-man

Source: Hankyung

Kakao's acquisition of SM Entertainment which is in final stages is currently at a standstill.

An investment banking official revealed on the 27th, "Negotiations are in final stages however Kakao is displeased because of additional conditions from SM CEO Lee Soo-man. The acquisition was supposed to be finalized last week since size and price of the sale had already been agreed upon at a high level with Kakao purchasing Lee Soo-man's entire 18.27% stake in SM for 1 trillion won, but, negotiations are currently stalled because Lee Soo-man threw out additional conditions last minute. 

"Lee Soo-man is demanding that in order to finalize the purchase, Kakao needs to agree to him maintaining his management rights, same as before, and needs the clause added to the sale contract. He's also demanding a substantial salary, similar to the level of profits earned through his private company 'Like Planning' which earned royalty profits of 24 billion won from SM last year."

"If Kakao acquires SM, its difficult for Like Planning to receive the same amount of contract work they're currently receiving through SM so it seems like Lee Soo-man is demanding a salary increase to compensate for this. Kakao has put the contract on hold and is currently negotiating additional terms and conditions proposed by Lee Soo-man."

Analysts believe SM's recent proposal to "change the articles of incorporation" at general shareholders' meeting" is also a strategy to increase negotiating power with Kakao. SM held a board of directors meeting on the 16th, two weeks before general shareholder's meeting on the 31st, to finalize shareholder list and closing date and added various measures to the agenda including "defending management rights" and "increase of capital increases through third parties." However, the proposal was canceled on the 25th due to shareholder opposition. This can only be interpreted as a signal that "there is a chance the sale might be withdrawn if Lee Soo-man uses management rights as leverage."

An investment banking official revealed, "adding such a last minute pre-condition during the sale process is generally seen a negotiation tactic."

1. [+3,832, -67] There is no end to Lee Soo-man's greed. If you're going to sell, just make it a clean sell. If you still want to participate in management, why even sell? So he wants to sell the company and still maintain management rights?? He's a total thief!
2. [+1,073, -16] Soo-man oppa, your excessive greed is going to ruin you. If you want to stay on so badly, then just stay and run the company yourself. 
3. [+748, -25] Lee Soo-man's greed knows no end... you would think now that he's in his 70s his material greed would subside but he's become obsessed that he's the only one that can manage the company. Looking at SM, he has never once fostered a shareholder-friendly management and even opened his own privately held company to filter profits through.. 
4. [+413, -33] Soo man-ah...enough. Stop with the greed! For someone with so little talent, your greed for money is going to ruin you.
5. [+262, -16] This is too much... Soo-man hyung... you're going to risk everything. Enough with the greed...tsk tsk
6. [+119, -1] If the acquisition falls through, let's do a thorough tax investigation on this yangban. So many suspicious things with his Like Company that sucking off all of SM's profits but absolving himself of any responsibility. He's put all key board members in chains and cut off their limbs so that he's the only one that can make any real decisions. He's a rotten ba$tard doing what trash companies are known to do. 
7. [+92, -1] Whether its Kakao or CJENM who acquires SM, I hope its taken over. He's basically running it like his own private business, not a corporation.
8. [+86, -3] Soo man-ah, are you mistaking yourself as the one acquiring Kakao???
9. [+69, -4] Too much greed. Kakao, CJ, don't take over SM ~~~
10. [+44, -6] SM is a sinking ship but he still wants to stay on as producer? It's been a long time since he lost his senses and is still stuck in his old ways like YG? Imagine if Big Hit had remained stubborn like him.
11. [+39, -2] No one wishes for management takeover of SM but its robbery what he's asking for. He wants a higher salary and management rights to stay as isㅋㅋㅋㅋ
12. [+34, -3] He must really be scared of handing it over and having to pay inheritance tax ㅋㅋ