Kakao Pay’s bid to acquire Siebert Financial collapsed due to regulatory concerns. 

Kakao’s bid to acquire Siebert Financial collapsed due to regulatory concerns.

This happened after the allegations of stock manipulations on Kakao pay by K-pop agency SM Entertainment.

On Wednesday, Kakao revealed that Kakao and Siebert’s financials mutually terminated the second round of the stock purchase agreement. Kakao acquired the remaining 31 per cent stake in Siebert Financial. 

The initial deal between the two companies was made in April this year. Kakao’s pay was to secure a 51 per cent stake in Seibert Financial for 103 billion won ($79 million). Kakao Pay acquired its 19 per cent stake in May, and a second stock purchase for the remaining shares was scheduled to take place next year.

The chairman and CEO of Seibert Financial remarked that “the decision to terminate the stock purchase is beneficial in the long-run interest of the company. This was done to avoid any uncertainty that might have occurred after the purchase.

The decline of the deal was hinted at last month.

when Siebert Financial reported to the U.S. Securities and Exchange Commission. They mention that the company had already issued a notice to Kakao to pay for terminating the deal. The notice to Kakao that an adverse effect has occurred after the allegations faced by Kakao Pay and its parent company, Kakao Corp. Where Kakao was accused of artificially injecting 240 billion won into SM Entertainment to take over the K-pop agency against HYBE.

The founder, Beom-su, Bae Jae-Hyun, and many other officers were referred to the prosecution office for more investigations.

If the corporate body is found guilty, then the largest shareholder of its internet-only Kakao bank may lose its entitlement to be the major shareholder.

Kakao has been working towards the expansion of the business portfolio overseas, focusing on earning more revenue. For this, Kakao wanted to acquire SM entertainment, seeing the worldwide market potential.

Similar allegations are also faced by Kakao Mobility, which tried to acquire an 80 per cent stake in Germany-based taxi platform FreeNow. For this, Kakao Mobility was slapped with a 27.1 billion won fine in June. The financial regulators are investigating more about the Kakao revenues.

Also Read: Chung Shin Was Appointed As The 1st female CEO Of Kakao.