HYBE continues to gain weight
HYBE, the music label of South Korean boy group BTS, announced on Feb. 10 that the K-pop powerhouse would purchase its local rival SM Entertainment.
The Seoul-based agency plans to spend $334 million to snap up a 14.8 percent stake from SM Entertainment founder Lee Soo-man, whose stake was 18.46 percent.
“We have signed a contract to purchase 3.5 million shares of SM Entertainment from its largest shareholder Lee Soo-man on Feb. 9, 2023,” HYBE said in a regulatory filing to the South Korean stock exchange.
Established in 1995, SM Entertainment has representated many K-pop artists, including TVXQ, Super Junior, Shinee, Exo, Red Velvet, NCT, and Girls’ Generation.
HYBE’s move would be a blow to Kakao Entertainment, which also decided to snap up a large share in SM Entertainment.
Kakao noted Tuesday that it would spend $172.8 million to buy 9.05 percent stake in SM Entertainment.
The transaction is set to finish by early next month, but founder Lee challenged its legitimacy by filing for an injunction to stop it.
SM Entertainment has recently faced a management dispute as its senior officials tried to take charge of the leadership by doing away with Lee’s hold on the company.
Some watchers come up with concerns that HYBE would monopolize the K-pop industry through the purchase of SM Entertainment shares.
On top of BTS, HYBE is home to such Korean artists as Seventeen, Le Sserafim, Tomorrow X Together, and NewJeans.
In 2021, its U.S. subsidiary HYBE America channeled more than $1 billion to acquire Ithaca Holdings and its properties like SB Projects and Big Machine Label Group.
As a result, HYBE has also represented U.S. pop stars like Justin Bieber and Ariana Grande.
“Kakao Entertainment may keep buying the shares of SM Entertainment. Then, the proxy war may take place between Kakao and HYBE,” HMC Investment Securities analyst Kim Hyun-yong said.
“From the perspective of Kakao Entertainment, it would want to expand its size to prepare for an initial public offering. HYBE would try to see its new rival gets stronger,” he said.
The share price of HYBE went down 1.51 percent on Feb. 10 on the South Korean stock exchange while that of SM Entertainment surged 16.45 percent.