This photo shows the headquarters of Hybe, the Korean entertainment agency behind supergroup BTS, in Seoul on Feb. 10, 2023. (Yonhap)
SEOUL, Feb. 10 (Korea Bizwire) – Hybe, the Korean entertainment agency behind supergroup BTS, said Friday it will acquire a 14.8 percent stake in its rival K-pop agency SM Entertainment to become its largest shareholder, a deal expected to have deep repercussions on the K-pop industry.
Hybe said in a regulatory filing that it has agreed to buy the shares from SM Entertainment founder Lee Soo-man for 422.8 billion won (US$335.8 million) and the deal will be sealed on March 6. Lee currently holds an 18.46 percent stake in SM Entertainment.
“The deal is aimed at strengthening (Hybe’s) competitiveness in the K-pop market and creating a synergy effect,” Hybe said in the filing.
On top of Lee’s shares, Hybe said it will additionally buy stakes from minority shareholders by March 1, seen as attempts to strengthen its grip on the entertainment agency ahead of the annual shareholders’ meeting.
Bang Si-hyuk, founder and chairman of Hybe, and Lee said in a statement that the two struck the stock purchase agreement for their shared vision of K-pop’s global success.
“We decided to collaborate for the shared vision of upgrading K-pop’s global competitiveness and becoming a lifestyle platform company for future businesses,” the two K-pop moguls said in the joint statement.
Hybe is home to global K-pop acts such as BTS, Seventeen, Tomorrow X Together, Enhypen, NewJeans and Le Sserafim, while SM Entertainment is one of the country’s top K-pop agencies, with big-name K-pop acts like EXO, Red Velvet, NCT and aespa under its belt.
Lee Soo-man (L), founder and former chief producer of SM Entertainment, and Bang Si-hyuk, founder and chairman of Hybe, are seen in these photos provided by the companies.
The latest move comes amid an ongoing management dispute between the founder and other senior executives.
On Tuesday, Kakao Corp., operator of mobile messenger KakaoTalk, announced it has signed a deal to buy a 9.05 percent stake in SM Entertainment for 217.2 billion won to become the second-largest shareholder.
Although SM Entertainment claimed the deal was aimed at diversifying its business portfolio, Lee filed for an injunction to stop the transaction.
On Friday, SM Entertainment issued a statement to voice opposition to Lee’s deal with Hybe.
“There are attempts to sell (company’s) stakes and acquire them, which neglect SM’s past efforts and values artists have pursued together,” co-CEOs Lee Sung-soo, Tak Young-joon and other executives said in the statement.
The company said it ended with its production contract Lee at the last of last year as he has taken excessive operating profits for years and undermined shareholder rights.
“The strategic partnership with Kakao was in line with the company’s decision-making process and has nothing to do with the largest shareholder’s claim that it is related to the management dispute,” it added.
The singer-turned-music producer founded the K-pop agency in 1995 and has been behind the production of SM’s leading artists, including H.O.T., S.E.S., BoA, Girls’ Generation, EXO and many others.
Lee’s joining hands with Hybe is expected to strengthen his stance in his fight against the current management of SM Entertainment, and pave the way for Hybe’s global expansion and enhance its multi-label strategy.
At stake is the future of SM Entertainment.
The current management has recently announced plans to introduce multi-production lines to veer from Lee’s dominant influence and diversify its portfolio in partnership with the deep-pocketed tech giant Kakao.
Shares of SM Entertainment jumped 12 percent and Hybe rose 4.6 percent, while Kakao had slipped 5 percent as of 10 a.m.
(Yonhap)
