HYBE, loser in K-pop control battle, sells stake in SM Entertainment

SEOUL, March 24 (Reuters) – South Korean music label HYBE (352820.KS), which manages boy band BTS, said on Friday it would attempt to sell its entire stake in SM Entertainment (041510. KQ) after losing a battle for control of the K-pop pioneer.

HYBE’s 15.78% stake in SM is worth 564 billion won ($437.14 million) based on social media giant Kakao Corp’s (035720.KS) takeover bid to acquire up to to 35% of the company at 150,000 per share, which closes on Friday.

That would represent a gain of more than 20% over the price paid by HYBE for its stake, most of which was acquired in February from SM founder Lee Soo-man, 70, considered the “godfather” of the K-pop industry.

For weeks, HYBE battled Kakao to acquire SM before dropping its bid earlier this month. But Kakao’s take-up price was well above HYBE’s 120,000 won per share bid that had received little attention from shareholders.

Kakao’s bid was also backed by SM’s current management team, led by Lee’s nephew.

HYBE President Bang Si-hyuk said last week that he was “personally pleased” with a new partnership with Kakao on fan platforms despite losing the battle against SM.

HYBE is planning a substantial number of acquisitions and investments this year as the K-pop giant seeks to strengthen its presence in the United States, Bang added.

SM shares were up 1.77% at 11:18 a.m. (0213 GMT) while the smaller Kosdaq index was up 1.13%. HYBE shares rose 0.85%, compared to a decline of 0.53% in the benchmark market KOSPI.

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

($1 = 1,290.2100 won)

Reporting by Hyunsu Yim; Editing by Jacqueline Wong and Jamie Freed

Our standards: The Thomson Reuters Trust Principles.

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