K-pop takeover battle loser Hybe to sell $580m stake in SM

SEOUL - South Korean music label Hybe, manager of supergroup BTS, said on Friday that it aimed to sell its entire 15.8 per cent stake in K-pop pioneer SM Entertainment for 564 billion won (S$580 million) by accepting a tender offer from bidder Kakao.

The decision marked a formal end to a takeover battle between Hybe and social media giant Kakao over SM that began in February after SM’s management became estranged from its founder Lee Soo-man over governance issues.

Hybe battled Kakao for weeks to acquire SM before dropping its bid earlier in March.

But it remained uncertain until Friday whether Hybe, currently SM’s biggest shareholder, would dispose of its stake.

Kakao, which has big expansion plans in the entertainment industry, launched a tender offer for SM earlier in March to acquire up to 35 per cent at 150,000 won per share after Hybe’s 120,000 won offer failed to win enough investor support.

The planned stake sale would allow Hybe to pocket a gain of around US$87 million (S$115.5 million), a 25 per cent quick return from an investment made just a month ago, mainly by purchasing a stake from Mr Lee, 70, who is considered the “godfather” of the K-pop industry.

Kakao’s offer was backed by the current SM management team, led by Mr Lee’s nephew.

Hybe chairman Bang Si-hyuk said last week that he was “personally satisfied” with a new partnership with Kakao on fan platform businesses, despite losing the battle over SM.

Hybe is planning a substantial number of acquisitions and investments in 2023 as the K-pop giant looks to boost its presence in the United States, he added.

SM Entertainment is home to popular K-pop groups such as Girls’ Generation, EXO, Red Velvet, Super Junior, SHINee, NCT Dream and Aespa. REUTERS