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HYBE with SM shares, is a super-large entertainment company born?

BTS agency HYBE purchased a 14.8% stake in SM Entertainment, a K-pop agency. Analysts say that a super-large agency could be born due to the possibility of a merger between the two major agencies.

HYBE announced on the 10th that it will acquire a 14.8% stake held by Lee Soo-man, SM's major shareholder and former general producer, for 422.8 billion won. As a result, Hive became the largest shareholder of SM at an instant.

Even before the advent of HYBE, SM had been in a management dispute. Former executive producer Lee Soo-man held an 18.46% stake in SM and maintained his position as the largest shareholder, but was criticized for various factors such as a contract between private production company Like Planning and SM.

As a result, activist fund Alain Partners Asset Management raised its voice with the support of minority shareholders, and Kakao also secured 9.05% of its stake in SM on the 7th in the form of a paid-in capital increase.

Conflicts continued inside SM. SM co-CEO Lee Sung-soo and Tak Young-joon announced 'SM 3.0' and announced Lee Soo-man's resignation. On the other hand, Kim Min-jong, a member of SM, criticized in an e-mail to all SM employees on the 5th, "Co-CEO Lee Sung-soo, who is for Lee Soo-man and SM family, said goodbye to the unilateral announcement without any discussion with the inside."

In this situation, some analysts say that a super-large agency could appear in the domestic music market as Hive quickly became the largest shareholder.

Starting with Hyun Jin-young in the 1990s, SM Entertainment, which made its name known as an entertainment agency, has grown into a leading agency in the domestic music market with the debut of H.O.T. in 1996. He then produced popular singers such as S.E.S., BoA, TVXQ, Super Junior, Girls' Generation, SHINee, and EXO, and played one of the main roles in the Korean Wave. In addition, Red Velvet, aespa, and NCT continue their activities and have established themselves as one of the major agencies in Korea.

HYBE also secured various labels, including Big Hit, which includes BTS and TOMORROW X TOGETHER. Pledis and rapper Zico's KOZ Entertainment, which includes Seventeen and fromis_9, belong to Hive, and idol groups that debuted last year, such as Source Music's Le Sserafim and ADOR's NewJeans, are emerging as a new trend.

Regarding the acquisition, HYBE said, "Chairman Bang Si-hyuk, the founder and largest shareholder, and former SM executive producer Lee Soo-man agreed on ways to share their concerns about K-pop's future and find a solution before signing the contract.

Chairman Bang Si-hyuk also stressed, "HYBE fully agreed with the strategic direction such as the implementation of metaverse, establishment of a multi-label system, and vision campaign to save the Earth," adding, "We will further expand K-POP's status in the global market by investing Hive's capabilities."

In addition to the stake purchase, HYBE said it will buy up to 25% of SM shares for 120,000 won per share from minority shareholders by the 1st of next month. However, the management dispute is expected to continue until the general shareholders' meeting scheduled for next month, as Alain Partners Asset Management claimed that 120,000 won per share is too low.


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