Japanese investment firms announce tender offer for up to 50% of JYP Entertainment; JYP says it received no proposal

Two Japan-based investment firms have announced plans to acquire up to 50 percent of JYP Entertainment through a tender offer. JYP Entertainment said it has not received any such proposal.

"We have not received any proposal regarding the acquisition of our shares in connection with the reported matter," JYP Entertainment said Monday.

The NEXROC Group and SVCV, Inc., both presenting themselves as Japan-based investment groups, distributed a press release to domestic media Monday afternoon stating that the two companies intend to acquire between 25 and 50 percent of JYP Entertainment's issued shares through a tender offer — a method by which shares are purchased from an unspecified number of shareholders outside the securities market at a pre-announced price within a set period. The companies set a target launch date of Nov. 20.

The proposed purchase price is being considered at a 30 percent premium over a reference share price, with the specific calculation method and final purchase price to be determined later. The two companies added that they plan to privately deliver a non-binding letter of intent to JYP Entertainment ahead of the tender offer and hold 30 days of negotiations. If those negotiations break down, the companies said they would announce whether to proceed with the tender offer and under what terms. They cited expansion of their investment portfolio in Asian culture and entertainment as the purpose of the acquisition.

JYP Entertainment's share price moved sharply on the news. The stock closed Monday's regular session down 2.31 percent at 36,000 won from the previous trading day. After the acquisition reports emerged, the share price surged more than 18 percent in after-market trading, closing at 42,150 won — 14.38 percent above the regular-session close.

The stake targeted by the two companies is large enough to shift control of the company. Park Jin-young, the largest shareholder and chief producer, along with related parties, holds roughly 15 percent of shares, meaning that securing 25 percent or more through a tender offer would displace him as the largest shareholder. Based on the after-market price, JYP Entertainment's market capitalization stands at about 1.5 trillion won ($1.13 billion), and acquiring a 50 percent stake would require around 750 billion won.