South Korea’s media and entertainment giant CJ E&M Corp. is seeking to buy a majority stake in Pledis Entertainment, a local entertainment agency, in a move to reinforce its content ahead of the planned merger with its home shopping network operating sibling CJ O Shopping Co. later this year.
According to multiple sources from the investment bank industry on Tuesday, CJ E&M has decided to acquire a 51 percent stake in Pledis Entertainment. An unnamed official from CJ E&M has confirmed that the company is working to buy Pledis Entertainment but details are still under discussion.
The acquisition attempt comes after the two companies recently signed a memorandum of understanding on a comprehensive partnership.
Pledis Entertainment is a local entertainment agency founded by Han Sung-soo - former manager of hallyu star BoA at SM Entertainment - in 2007. The company is jointly owned by Han and So-net Entertainment of Sony Group with each 50 percent shares. It manages popular K-pop artists such as Seventeen, Nu’est, Pristin, and After School.
CJ E&M is likely to secure a 51 percent stake in Pledis Entertainment from both Han and So-net Entertainment. Sources noted that CJ E&M is believed to have written down 20 billion won ($18.6 million) to 30 billion won as purchasing price for the stake given the fact that the value of Pledis Entertainment is estimated at about 50 billion won.
Popular K-pop artists managed by Pledis Entertainment are expected to help CJ E&M enhance its music business and sales, which has been a weak part of the company. The company is also hoping to expand its overseas content sales by promoting hallyu artists.
An unnamed official from the investment bank industry said that CJ E&M has launched a number of K-pop idol groups through talent competition programs such as Produce 101 but it does not have any artists under its own management. Following the acquisition, the company is expected to focus to groom globally recognized artists.
CJ O Shopping and CJ E&M are currently working to merge on a swap deal at a ratio of 1 to 0.41 with goals to become a global multimedia and commerce powerhouse. Shares of CJ E&M ended at 90,200 won on Tuesday, down 0.33 percent from the previous session. The stock has been hovering below 93,153 won, the price at which shareholders who oppose the merger plan can ask the company to buy back their shares, since the merger announcement. CJ E&M shareholders who are against the marriage with CJ O Shopping can exercise their rights until June 18.
By Yoon Jin-ho and Lee Eun-joo
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