SEOUL — Bae Jae-hyun, the Chief Investment Officer of Kakao Corp., was arrested Thursday on charges of suspected stock manipulation related to the tech giant's acquisition of SM Entertainment.
According to Yonhap News Agency, the Seoul Southern District Court issued an arrest warrant for Bae, citing potential destruction of evidence and flight risk. The accusations stem from a bidding war between Kakao and Hybe, the parent company of K-pop superband BTS, over the acquisition of SM Entertainment in February.
After acquiring a 14.8% stake from SM founder Lee Su-man, Hybe offered to purchase additional stocks from small shareholders at 120,000 won (US$88.51) per share. The offer was suspended when market prices significantly exceeded the bid.
In March, Kakao and its subsidiary, Kakao Entertainment, secured nearly a 40% stake in SM, gaining management control of the label. The Financial Supervisory Service suspects Bae and two other Kakao executives of inflating SM share prices by investing nearly 240 billion won, exceeding the tender offer set by Hybe.
Bae has denied allegations of stock manipulation, maintaining in a statement last week that the acquisition was conducted "legally inside the market."