K Wave Media Ltd., an umbrella entity of South Korean entertainment companies, is set to go public on the Nasdaq next month to raise money from global investors for content production and strengthen its bargaining power in talks with giant content distributors such as Netflix Inc.
The company, formerly K Enter Holdings Inc., plans to hold a shareholder meeting to approve a merger with Global Star Acquisition Inc. for trading on the Nasdaq Stock Market under the symbol of KWM in February, according to stock market industry sources in Seoul on Friday. The listing would be the first such case for a South Korean entertainment company.
K Wave and Global Star, a Nasdaq-listed special purpose acquisition company (SPAC), said on Dec. 31, 2024, that the US Securities and Exchange Commission (SEC) has approved the two companies’ combination.
13 MONTHS RATHER THAN SIX
K Wave filed a securities registration statement with the SEC in November 2013.
The SEC may have taken more time than the usual six months for an initial public offering to protect investors, given the complexity of K Wave’s listing through a SPAC deal, industry sources in Seoul said.
A SPAC is a publicly traded firm created to acquire or merge with an existing company.
“It is rare for a holding company with many subsidiaries to go public through a SPAC in Korea and the US,” said a Global Star official. “The SEC spent a lot of time identifying and reviewing the deal structure.”
COALITION OF SIX MAJOR PLAYERS
K Wave is a holding company of six local entertainment operating firms such as Solaire Partners Ltd., a Seoul-based private equity firm that has invested in some of the highest-grossing films, including the Oscar-winning Parasite.
Bidangil Pictures, the producer of Space Sweepers, an outer space sci-fi blockbuster, which topped the Netflix movie charts in 2021, joined the group.
The Lamp Co., which produced A Taxi Driver, a hit film based on a true story during the 1980 pro-democracy demonstrations, Apeitda Production behind The Witch and Studio ANSEILLEN – as well as one IP merchandising company – Play Company also participated in the entity.
K Wave had initially planned to be launched by seven domestic entertainment firms. However, one firm decided not to join the coalition, reducing K Wave’s corporate value to $590 million from the original $610 million.
FOR MORE GLOBAL BOX OFFICE HITS, BETTER BARGAINING POWER
Global Star, which focuses on the Nordic region and Asia Pacific, especially Southeast Asia, proposed those South Korean entertainment companies, to capitalize on the global craze for K-content such as Netflix’s megahit Squid Game.
The SPAC has been working with Samjong KPMG, the South Korean unit of the global accounting and consulting firm KPMG, on the deal since August 2022.
K Wave plans to raise more money for more blockbusters while raising its bargaining power in negotiations with major content distributors.
The holding company aims to not only supply intellectual property (IP) to over-the-top (OTT) media platforms but also take the initiative in the content distribution deals by paying at least 30-40% of production costs to jointly own IP rights.
By Ji-Eun Ha
hazzys@hankyung.com
Jongwoo Cheon edited this article.ㄹ
