South Korean entertainment company HYBE is set to acquire a controlling stake in competitor SM Entertainment, becoming its largest shareholder with a 14.8% stake.
In a regulatory filing released on Feb. 10, HYBE announced that it had bought 3.5 million shares from SM Entertainment founder and former CEO Lee Soo-man for approximately $78.46 per share, worth a total of $334.3 million.
Lee, who is often referred to as the “godfather of K-pop”, held an 18.5% stake in SM Entertainment and had put his stock up for sale in 2021 to increase the company’s corporate value. However, after the sale, the company terminated its production contract with Lee’s production company, Like Planning, due to claims from investors that the ties between SM and Like Planning were affecting shareholder value.
The deal between HYBE and Lee is set to be finalized on March 6. HYBE has also offered to purchase another 25% stake in SM from other investors. In response, SM’s top executives, including its co-CEOs, issued a statement opposing any “hostile takeover” from outside companies, including HYBE.
A survey reportedly found that 85% of SM employees were against the HYBE takeover.
One employee even went viral for her distraught reaction to the shakeup, writing in a company review that she has lost motivation and pride in her work in the company.
Despite the divided responses, SM’s shares jumped 16% at the open in Seoul after the announcement and HYBE’s shares increased by 6%. Other competing entertainment companies, such as JYP Entertainment and YG Entertainment, also saw a rise in their shares.
In a joint statement, HYBE chairman Bang Si-hyuk and Lee said that they “mutually agreed on the shared vision for the future of [the] K-pop industry.”
The statement also said that HYBE agrees with Lee’s initiatives for the industry’s future, including involvement in the metaverse, a multi-label system and a sustainable vision campaign.
Considered to be one of…
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