South Korean firm Kakao Corp. To Acquire 9.05% Stake in SM Entertainment

Kakao Corp of South Korea announced on Tuesday that it will acquire a 9.05 percent stake in SM Entertainment, the entertainment agency behind K-pop acts such as NCT and Aespa, for 217.2 billion won ($172.8 million).

Kakao will acquire 112 billion won in SM Entertainment shares as well as 105 billion won in convertible bonds, making it the company's second-largest shareholder once the transaction is completed.

According to an emailed statement from Kakao, the two will collaborate on joint management projects such as global K-pop auditions.

"We hope to work together in competing in the heavily contested global music and content market through this investment," said Kakao Chief Investment Officer Bae Jae-hyun.

Kakao is a South Korean internet company founded in 2010. It was formed by the merger of Daum Communications and the original Kakao Inc. The company was renamed Daum Kakao in 2014. In 2015, the company rebranded once more, this time simply as Kakao.

Path, an American social media company that had found success in Indonesia, was acquired by the company in May 2015. Kakao paid $1.5 billion for a 76.4% stake in LOEN Entertainment, a large South Korean entertainment company, in January 2016. It was later renamed Kakao M. KakaoTalk, a free mobile instant messaging app for smartphones with text and call features, has helped the company grow in popularity.