In recent days, the ̾k̾o̾r̾e̾an entertainment industry is in turmoil as SM restructures the main structure. With the issuance of new shares and attracting different investors while Lee Soo Man - the father of SM Ent no longer holds the main role, many people are curious about the future of this company.
In particular, when it was reported that Kakao, the leading technology company in ̾k̾o̾r̾e̾a, announced on the 7th that they would become the second largest shareholder of SM Ent, along with that, another news was provided by industry insiders. is about HYBE also starting to implement plans to buy SM stock. Not only that, this is said to have been a plan that has been quietly implemented since 2020.
After some hours from this news leaking out, HYBE announced their own statement about doing this:
Last month, when Kakao Entertainment announced it had attracted an investment of about 952.5 million USD from a global fund, the SM board decided to issue new shares worth about 111.9 billion KRW and approximately 105.2 billion KRW worth of transfers to Kakao through a third-party attribution мєтнod. However, the number of shares Kakao bought back did not come from the founder and largest shareholder and former executive producer of SM, Lee Soo Man. Accordingly, the percentage of shares held by Lee Soo Man so far (18.46%), is expected to decrease in price.
SM, which has always maintained its leading position among ̾k̾o̾r̾e̾an entertainment companies, seems to have fallen behind HYBE a few years ago. The shareholder activist fund Align Partners Asset Management believes that SM is undervalued and repeatedly demands to improve the "one-man governance structure" of founder Lee Soo Man.
All of this is leaving SM in a state of turmoil due to inf̾i̾g̾h̾t ̾ing. Meanwhile, the head is scrambling for the last chance to sell his shares at a premium. Before this news, industry insiders said that HYBE - a giant in the entertainment industry is being mentioned as a negotiating partner. HYBE is said to have considered purchasing shares of SM's general and minority shareholders through a tender offer.
According to the IB industry, HYBE has been messing around with a tender offer for SM Ent until recently. It is said that a large domestic securities company was in charge of arranging acquisition financing and adjusted a tender offer price of 100K to 120K per share. If the tender offer was successful, (SM) would be co-managed by HYBE as the majority shareholder and LSM as the second largest shareholder. The market believes that this is why SM held an emergency board meeting on the 7th to allow Kakao to buy in via the paid-in capital increase.
Along with that, the fact that Lee Soo Man has applied to the court for a preliminary injunction against SM Enter's issuance of new shares and convertible bonds (CB) is said to be a move to prevent the share acquisitions of Kakao and accelerated negotiations with HYBE and others. If HYBE formalizes its tender offer, an all-out battle could erupt over the composition of the board.
On the same day, after being asked by the K-media and in response to market inquiries, HYBE confirmed it is currently looking into the purchasing shares of the company.
HYBE stated that: "We are continuously reviewing matters related to purchasing SM Entertainment shares through the open market as well as acquiring shares. At this time, there are no confirmed matters."
The label then stated that it would “Release another announcement after reviewing the matters related to (the purchase) in detail, or within a month.”
The news is a blow to Kakao, which has been working with the company’s management executives and recently purchased a large share in the company, although Lee Soo Man is disputing the legitimacy of the sale of shares.
Moreover, it is believed that since 2020, HYBE has been exploring acquisitions as Lee began selling his shares. This is said to prepare for BTS' enlistment and HYBE is forced to find new directions to increase sales. It can also be seen that from the year of development until now, the acquisition of subsidiaries and the development of small labels under the umbrella is the main direction of HYBE. And SM, most likely part of their next acquisition plan.
K-netizens also have some comments about this news:
- This kdrama keeps dramaing adding more and more layers as we go
- are they buying SM or what?? and what does SM exactly do? artists agency?
- The kdrama continues
- They still want buyying sm stock???
- Considering, no finality. And I hope they change their mind.
- I really hope this is not true..we have no wish for Hybe to stick their fingers in the political war of LSM and his nephews. Those ppl are corrupted as hell and it will only taint Hybe's image and reputation to be involved with them. Hybe is already doing so good on their own.
- Hmmm HYBE was rumored to be buying SM or be part of a bid to takeover SM since last winter. When this is all said and done, I hope someone does some sort of comprehensive review
- As a fan I don't like it. But as somebody who is interested in company growths and developments it is very interesting. How would that work out? I feel like the core philosophies of both companies are absolutely different. HYBE values idols as artists and SM doesn't.
- This is interesting because I thought back then Hybe was thought to have the least chance of acquiring LSM's stake because of SM/Hybe competition or perhaps personal rivalry. Though that latter bit is my own interpretation.
- i really cannot imagine a world in which hybe owns sm like sm's "musical direction" (to put it nicely) does not align with hybe's at all.
- Bang really said “I’m here to transform the k-pop industry”…by slowly dismantling and/or buying it
- So reason for the monopoly thing that was been thrown around online.
- so its either kakao x sm or hybe x sm right ??
- Hybe doesn’t need to buy SM but if they do it would be so satisfying to see LSM realise who is incharge
- HYBE BOSS ! Can’t wait to see what will happen. If it happen… boum
- There are no permanent enemies and friends, only permanent interests. Hybe probably sensed great ∂αиgєя from Kakao's monopoly attempt so they're trying to prevent it.
- Anyone mad about it are hypocrites. Where was this outrage when SM bought some of Woolim Ent??? STAY CONSISTENT
- Gogo bang pd
