Well, things got hot and heavy extremely quickly in the SM Entertainment mess, huh? Following earlier reports that HYBE was considering investing in SME, it’s now been confirmed that they’ve acquired a 14.8 percent stake in SME from Lee Soo Man worth around $334 million, buying 18.4% of his shares.
On February 10, HYBE was officially confirmed to be acquiring a 14.8 percent stake of SM Entertainment from Lee Soo Man for 422.8 billion won (approximately $334.3 million).
Additionally, they plan on acquiring the stakes of minority shareholders now.
Outside of its deal with Lee Soo Man, HYBE has also announced that it plans to acquire additional shares of SM Entertainment from minority shareholders, which will further increase its stake in the company.
Other reports say they plan to get at least 40% of the company by March, with support from Lee Soo Man, which would only make sense.
Bang Si Hyuk and Lee Soo Man also stepped forward to release a joint statement on the deal.
SM Entertainment’s largest shareholder and founder, former executive producer Lee Soo Man and HYBE’s chairman, Bang Si Hyuk, have joined hands so that SM Entertainment and HYBE will become game changers in the world’s popular music.
This will enhance K-Pop’s global competitiveness, and we have decided to make our shared vision of a lifestyle platform for future endeavors a reality.
Lee Soo Man has decided to transfer his shares to HYBE to begin a partnership with HYBE. HYBE shares SM Entertainment and Lee Soo Man’s vision to implement the metaverse, establishing a multi-label system, and vision campaigns to save the world, and HYBE will use its resources so that K-Pop will enhance its standing in the global market. SM Entertainment is a resilient company that transformed a fast-changing music industry into an industry that enables Korean music to grow. It is the pioneer that blazed a trail and has allowed K-Pop to become international and is the K-Pop pioneer that suggested a new genre called K-Pop to people all over the world.
At the center of all of SM Entertainment’s achievements is Lee Soo Man. It isn’t an exaggeration to say that everyone in the K-Pop industry has been influenced by Lee Soo Man. Lee Soo Man industrialized Korean music, which was once barren, and has made it the world’s best and is the legacy of our musicians.
Lee Soo Man and HYBE will actively cooperate in improving SM Entertainment’s governance as well as its executive management. Lee Soo Man, while making the important decision to sell his shares, also supported HYBE’s plans to purchase shares from minority shareholders.
SM Entertainment and HYBE will combine their capabilities to globalize K-Pop and will create a strong synergy in various businesses beginning with labels and platforms. We will enhance the current platform leading the global market so that the world’s fans will be able to meet more artists and experience the joy of K-Pop.
We ask that you support the future that SM Entertainment and HYBE will create together.
Unreal, to say the least. Not to mention funny.
Somehow it gets even crazier, though. Lee Sung Soo and Tak Young Joon, the two co-CEOs of SME who basically were accused of doing a coup to LSM themselves, are now complaining that this is a hostile takeover.
“This statement reflects the collective positions of 25 chief directors at SM Entertainment, including co-CEOs Lee Sung Soo, Tak Young Joon, as well as all other officers who hold positions above division chief.
Back on February 3, SM Entertainment announced plans to enter its new, key phase ‘SM 3.0’, transitioning from a single producer to a multi-production/multi-label system. But as soon as this new phase was announced, it is being reported that hostile merger and acquisition attempts are being carried out, attempts which not only undermine SM’s much deliberated decision, but also the values of SM Entertainment which it has built up alongside its artists all these years.
SM Entertainment is a company made up of approximately 600 employees, working hard each day in the hopes of raising SM Entertainment’s status to that of the #1 entertainment company. It is also a company which, on the basis of its employees’ efforts, has led the K-Pop industry proudly until this day. With the new phase ‘SM 3.0’, SM Entertainment planned to once again take its next steps toward becoming a leading company in global entertainment with the support of fans and shareholders, and as such, we would like to deliver the firm position that every employee of SM Entertainment, every artist, strongly disapproves of any and all hostile acquisition attempts from the outside.
The strategic partnership between SM Entertainment and Kakao, publicly announced on February 7, marks a move in securing the necessary components to fulfill ‘SM 3.0’. The partnership is sure to demonstrate a powerful synergy effect in strengthening the global reach of SM’s IP content with various applications. This vision for a mutually beneficial strategic partnership has been discussed and agreed upon thoroughly with Kakao. Thus, we would like to stress that the strategic partnership with Kakao was a management decision which we felt was necessary for the fulfillment of ‘SM 3.0’, and thus the partnership plays no significant role in the so-called ‘management battle’ which our company’s largest shareholder insists on undertaking.”
Oh boy. Strap in for the lawsuits, folks.
So far both parties have avoided taking every potential off-road to de-escalate the situation and have floored it instead, so it could get exciting.
And at least we’ll have that drama to fall back on, because it’s certainly not looking great from a consumer perspective. I would say that anti-trust regulations should factor at some point, but given the state of chaebols, I doubt it.
Could we at least get company stans to admit that none of the petty beef matters one iota to these people and they would make deals with a serial killer for an extra buck if they could get away with it? No? Yeah, what was I thinking?