Hybe Moves to Sell Entire SM Entertainment Stake After Takeover Attempt Falls Short — $434 Million+ Deal

  • Save

  • Save
Seoul, South Korea. Photo Credit: Ciaran O’Brien

12 days after formally ending a much-publicized campaign to take over SM Entertainment, BTS agency Hybe is selling its stake in the rival K-pop company.

This latest twist in the SM-Hybe showdown just recently came to light in regulatory filings. Towards February’s beginning, not long after scooping up Quality Control and emphasizing its ambitious global-expansion plans, Hybe purchased 14.8 percent of SM from founder (and former chief producer) Lee Soo-man – thereby becoming the largest shareholder.

And as Hybe disclosed a goal of increasing the interest to a controlling 40 percent stake, SM revealed the framework for a “3.0” transformation and publicly pushed back against the competing business’s outlined takeover. Both companies launched websites dedicated to advancing their respective positions, which were likewise explained through all manner of in-depth resources and videos.

Meanwhile, SM unveiled a pact with Kakao’s entertainment division (which is backed by Saudi Arabia and others), proposing the sale of around nine percent of SM, a distribution tie-up, and the creation of a jointly owned stateside unit. For obvious reasons, Hybe (successfully) attempted to halt the contract in a South Korean court.

But Hybe’s tender offer for another 25 percent of SM (priced at ₩120,000/$92.57 per share), to reach the aforesaid 40 percent controlling stake, fell far short of the objective, ultimately bringing under one percent more of the company to Hybe. Kakao subsequently rolled out a tender offer of its own (priced this time at ₩150,000/$115.71 per share).

The latter, and specifically an observation “that the market has been showing signs of overheating due to competition with both Kakao and Kakao Entertainment,” then prompted Hybe to pull back. And now, according to the highlighted regulatory documents, the Supertone owner is looking to cash out of all 3,757,237 of its SM shares.

According once again to a translation of the Korean-language filings, the sale is expected to wrap on the 28th and will deliver over ₩563.59 billion/$434.69 million to Hybe – or the ₩150,000-per-share price of Kakao’s tender offer for each of the selling company’s 3.76 million SM shares.

Of course, as Hybe paid a reported ₩422.80 billion/$326.10 million or so for Lee Soo-man’s 14.8 percent interest, it appears that the deal will bring with it a sizable profit on the initial investment.

At the time of this writing, SM Entertainment stock (KRX: 041510) was trading for ₩107,200/$82.68 per share – well beneath the price of the tender offers despite reflecting a 43 percent hike since 2023’s beginning. Hybe stock (KRX: 352820), for its part, was worth ₩187,500/$144.62 per share, having slipped slightly from Thursday’s close.