BTS’ agency HYBE acquires 15% stake worth Rs. 2,767.30 crores in K-pop competitor SM Entertainment; becomes largest shareholder

Chairman Bang expressed his deepest respect for former Chief Producer Lee and promised to continue Lee’s global vision.

By Monica Yadav -

February 10, 2023 - 10:02 AM IST

HYBE today signed an agreement to acquire a 14.8% stake in SM Entertainment held by SM’s founder and former Chief Producer Lee Soo Man, worth KRW 422.8 billion (approx Rs. 2,767.30 crores). This positions the company as the single largest shareholder in SM Entertainment. This acquisition represents a major step by HYBE to integrate the global expertise of both companies to become a game changer in the global music industry.

BTS’ agency HYBE acquires 15% stake worth Rs. 2,767.30 crores in K-pop competitor SM Entertainment; becomes largest shareholder

SM Entertainment, one of the largest music companies in Korea, has played a pivotal role in expanding the boundaries of K-pop for the last decades, starting with BoA who won first place on Oricon’s album chart in Japan. HYBE, home of 21st-century pop icons BTS, has led K-pop’s global phenomenon as an industry leader.

Founder and Chairman of HYBE, Bang Si Hyuk, and former SM Chief Producer Lee mutually agreed on the shared vision for the future of the K-pop industry, followed by the signing of the Stock Purchase Agreement (SPA).

Chairman Bang expressed his deepest respect for former Chief Producer Lee and promised to continue Lee’s global vision. “HYBE fully agrees with former Chief Producer Lee’s strategic initiatives including metaverse, a multi-label system, and the sustainable vision campaign,” said Chairman Bang.

“Leveraging our capabilities and resources, HYBE will further strengthen the presence of K-pop on the global stage,” Bang added.

HYBE is poised to focus on improving SM Entertainment’s corporate governance in conjunction with SM’s announcement last January to revise its internal management structure. Following former Chief Producer Lee’s strong commitment, HYBE aims to take an active role in continuing SM’s governance improvement measures.

Former Chief Producer Lee has decided to terminate the business agreement between SM Entertainment and his private company Like Planning. To reiterate his commitment to improving corporate governance, Lee confirmed not to receive any fees guaranteed by the three-year sunset clause following the termination of the contract.

Lee also agreed to sell his private shares in SM’s affiliate companies to HYBE in order to fully support corporate governance improvement measures. HYBE contributed an additional fund to help Lee reorganize his stakes in affiliates.

In addition to the share acquisition, HYBE began its tender offer for SM’s shares held by minority shareholders at the same price of KRW 120,000 starting today, to protect the interest of minority shareholders in SM Entertainment. With former Chief Producer Lee’s full endorsement, the offer is to share the control premium enjoyed by the largest shareholder with minority shareholders.

This announcement comes on the heels of yesterday’s historic acquisition of QC Media Holdings, Inc. in the U.S. and underscores HYBE global leadership team’s commitment to diversifying the company’s offerings.

HYBE is focused on innovation in the global entertainment business with its strategic initiatives and movement. It marked a strong presence across regions by establishing headquarters in Korea, the U.S., and Japan, and has been successfully fostering individual record labels based on its multi-label strategy.

With its extensive global network and expertise, HYBE aims to strategically partner and collaborate with SM Entertainment in three key business pipelines–label, solution, and platform–allowing more fans around the world to engage with artists and enjoy K-pop.