(Bloomberg) -- A South Korean court blocked SM Entertainment Co.’s planned share sale to internet giant Kakao Corp., scuppering the company’s favored plan and opening the door to a takeover of SM by BTS label Hybe Co.

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The Seoul Eastern District Court ruled in favor of SM founder Lee Soo-man and barred Kakao’s deal to buy 9% of SM, SM said in a regulatory filing Friday. SM last month agreed to issue new shares and convertible bonds to Kakao in a move that would have made the messaging-app operator its second-largest shareholder, diluting Lee’s hold over the company.

The court concluded that the sale to Kakao could weaken Lee’s influence and damage his share value, according a court document. There was no urgent need for SM to issue new shares to raise more funds from Kakao, although SM might have some rational reasons to pursue a strategic partnership with the platform company, the court added.

Lee’s attorneys welcomed the court’s decision and pledged to firmly respond against any “illegal acts” by current SM management. They had earlier argued that the deal between SM’s board members and Kakao was designed to oust Lee from the company. He then sold his 14.8% stake to Hybe and put his weight behind the rival K-pop management agency’s bid to acquire more of SM and build a global giant. The result of Hybe’s tender offer to buy up to 25% of SM shares is expected to be announced on Monday.

Read more: K-Pop Pioneer Hails Kakao’s Internet Power in Billionaire Battle

SM’s executives have said the Kakao deal is a strategic partnership and one they’re determined to pursue.

“Even if Kakao doesn’t hold a stake in SM, we will continue to seek partnership with Kakao, if it’s a way to boost shareholder value,” SM Chief Financial Officer Daniel Jang said in an interview ahead of the ruling. “Hybe doesn’t have enough cash to buy 100% of shares and if they are not going to buy the full stake, they should not participate in the management and stop trying to take over the board.”