K-pop powerhouse Hybe’s initial plan to gain stable management control over rival company SM Entertainment by buying more shares through a tender offer fall through.

On Feb. 10, Hybe announced a tender offer for SM Entertainment’s shares held by minority shareholders. It offered 120,000 won ($92.60) per share with a goal to additionally secure up to 25 percent (5,951,826 shares) of SM Entertainment. The tender offer ended March 1.

Hybe was only able to acquire 233,817 shares through this offer, according to the company’s announcement on DART, the Financial Supervisory Service’s electronic disclosure board, on Monday.

With the additional shares, Hybe now owns 15.78 percent of its rival.

Industry insiders see that the offer was not appealing enough to many shareholders, as the stock price of SM Entertainment surged over 120,000 won after Feb. 14.

The agency of K-pop phenomenon BTS suspects this sudden surge in price is the result of stock price manipulation conducted to interfere with Hybe’s tender offer.

Hybe pointed to an abnormal purchase of 2.9 percent (683,398 shares) of SM Entertainment's issued shares on Feb. 16. The SM Entertainment stock rose to an all-time high of 133,600 won the same day.

The company on Feb. 28 submitted a petition to the FSS asking for an investigation, and the financial watchdog is currently looking into the case.

To make matters worse, SM Entertainment announced Monday that Hybe should not attempt to sign a block deal with the agency's shareholders as an alternative measure to the tender offer, claiming it is illegal.

"There have been several reports that Hybe is attempting a block deal," SM Entertainment said in a statement. "If the rumor is revealed to be true, we will take strong measures including legal action to minimize the damage to SM shareholders."

Hybe immediately refuted SM's claim, saying that it has not considered a block deal while criticizing SM's announcement as an "amateur move."

On Feb. 10, Hybe signed a deal with SM Entertainment founder Lee Soo-man to buy his 14.8 percent stake for 422.8 billion won.

The deal was considered a countermeasure for Lee against current co-CEOs Lee Sung-soo and Tak Young-jun. The two sides have been fighting for management control over SM Entertainment.

IT giant Kakao had also gotten involved in this feud by signing a partnership deal with the co-CEOs of SM Entertainment to buy a 9.05 percent stake in the K-pop agency in early Februrary.

However, the current situation is not the worst for Hybe, as the court last week ruled in favor of SM Entertainment founder Lee on his request to block Kakao's bid.

Lee claimed that it was illegal to issue new shares and convertible bonds to Kakao -- a third party -- when the agency is currently going through a business management dispute.

SM Entertainment on Monday canceled a contract to issue new shares and convertible bonds to the tech giant, as the court ordered.

The deal was considered crucial to the management dispute, as it would have made Kakao the second-largest shareholder of SM Entertainment. It means that Kakao needs to find some other ways to gain management control over SM Entertainment, while Hybe stands as the biggest shareholder with more than 15 percent.

Moreover, Hybe on Monday pressured SM to terminate its strategic partnership with Kakao, saying it is unfair.

"The contract has a clause unfavorable to SM but in favor of Kakao," Hybe said in a statement. "The current board of directors should fulfill its duty by actively exercising the right acquired by SM to terminate the contract."

Hybe added that SM Entertainment now has the right to revoke the partnership deal, as the court injunction made it impossible for them to seal the acquisition.

Adding to the favorable court ruling, Hybe is also gearing up to secure more funds, which could be used for possible future acquisitions of SM Entertainment stock.

According to a local news outlet's report, it started reaching out to domestic and foreign entertainment companies and financial investors to raise up to 1 trillion won. Morgan Stanley is in charge of managing the deal.