Hybe Acquires Nearly 900,000 SM Entertainment Shares for $78.2 Million

Hybe SM Entertainment shares
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Hybe SM Entertainment shares
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Photo Credit: Hybe

Hybe announces the upcoming acquisition of nearly 900,000 additional shares of SM Entertainment stocks for $78.2 million, following the former’s acquisition of a 14.8% stake in the latter earlier last year.

K-pop powerhouse Hybe continues its long-running quest to take over SM Entertainment (SME), this time with an announcement that it would soon acquire an additional 869,948 shares from founder Lee Soo Man for $78.2 million (104.3 billion KRW). The acquisition will be finalized on Thursday, March 7, with Hybe gaining a 12.6% stake in SM Entertainment.

Early last year, Hybe gained a 14.8% stake in the company from Lee Soo Man for $317 million (422.8 billion KRW), outbidding South Korean internet company Kakao, which owns the majority share. Hybe offloaded some of its SME shares last year, bringing its stake down to around 8%, but the latest deal brings that number back up to 12.6%.

At the time, foot options (stock purchase rights) for all of Lee Soo Man’s remaining shares in SME were granted to Hybe — but the deal required Hybe to purchase the stocks at the same price as those it initially acquired in the deal, at 120,000 KRW each.

“Lee Soo Man recently notified us of his intention to exercise his foot options,” said Hybe in a statement. “We are simply fulfilling our end of the contract.”

As a result, rumors have circulated that the deal was brokered with Lee Soo Man to ensure that Hybe could gain the lion’s share of SM Entertainment in the face of the company’s continued issues with Kakao, its current largest shareholder. The latest transaction means that Lee will no longer hold any stake in the company.

Kakao and its subsidiary Kakao Entertainment hold a combined 39.87% stake in SM Entertainment, with 20.76% and 19.11%, respectively, according to SME’s quarterly financial report in November. But as Kakao’s chief investment officer, Bae Jae-hyun, is currently in custody in an ongoing trial on charges of alleged stock price manipulation, the company is currently lying low — though it reports it will not be offloading any of its stake in SME.