This article was published on the ChosunBiz MoneyMove (MM) site at 3:13 p.m. on Dec. 1, 2025.
SME's subsidiary sales are facing difficulties. KeyEast and SM C&C have been looking for new owners for more than a year but have not produced any notable results. In particular, KeyEast had even signed a sales contract, but the likelihood of the transaction collapsing has grown as the acquisition candidate failed to raise the remaining payment.
SM designated Iro Investment Fund No. 1 as the buyer of KeyEast and agreed to sell 6,592,51 shares held by SM Studio and SM Entertainment Japan (SMEJ) Holdings at 5,160 won per share. The total contract size is 34 billion won, and considering the current share price, the control premium is about 16%. Iro Investment Fund No. 1 has already paid 3.4 billion won, 10% of the sale price, as a deposit, and if it pays the remaining 30.6 billion won by the 4th, it will become the new owner of KeyEast.
KeyEast runs a management business and produces video content such as drama. Actors Kim Hee-ae, Cha Seung-won, Lee Joo-bin and Han Sun-hwa are affiliated. It has also produced dramas such as Voice, The School Nurse Files, and Dream High.
However, according to the investment banking industry, Iro Investment Fund No. 1 is reported to be having difficulty raising the remaining payment. Although the payment date has not yet arrived, the situation is realistically impossible to secure the funds. As this news spread, other entertainment companies that had shown interest in acquiring KeyEast were also sensed attempting to continue with this contract. However, SM is reportedly considering canceling the contract entirely, viewing the new acquisition candidate as also unlikely to complete the deal.
Iro Investment Fund No. 1 is a newly formed investment fund established in September last year, and questions about its ability to pay the remaining amount arose in the market immediately after it was named as an acquisition candidate. Industry insiders say that behind Iro Investment Fund No. 1 is a loan shark surnamed Lee who actually provides the funds.
The person surnamed Lee was previously arrested on charges of stock price manipulation but was released on bail. He is still active in the capital market through shares of KOSPI-listed companies. That company is reportedly currently facing difficulty raising capital due to recent management disputes and the postponement of a rights offering.
This is not the first time KeyEast's sale has hit a snag. SM began actively selling KeyEast last year, and earlier this year it selected Cheongdam Investment and KNT Investment as the preferred negotiation partners. However, it failed to close the deal at that time.
SM C&C, which SM put up for sale along with KeyEast, has been unable to find a buyer for more than a year. According to the capital markets industry, SM C&C has put up for sale a total of 52.01% of its equity, combining the 29.23% stake held by SM and the 22.78% held by second-largest shareholder SK Telecom. The asking price is reportedly about 1,769 won per share, and considering the current share price in the mid-1,200 won range, the control premium reaches 30%.
SM C&C originated as Irya Distribution, a travel company founded in 1980. After being acquired by SM, it entered the advertising agency business and now operates management and content businesses as well. However, the advertising agency business, which accounts for 60% of total sales, has seen sales plummet due to an economic downturn, and performance has slowed. As of the first half of this year, it recorded an operating loss of 4.2 billion won and turned to deficit. Revenue also fell 25% from the same period last year. Considering these results, the price of SM C&C currently on the market is considered somewhat expensive.