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Friday, June 14, 2024

HYBE to sell stake in SM Entertainment for $435 million


The three giants of the South Korean music industry, HYBE, Kakao Corp and SM Entertainment, have been embroiled in a weeks-long corporate battle for control of the latter.

The battle officially ended on Friday (March 24), with news that HYBE will sell its entire stake in SM for $437 million.

as Report go through ReutersHYBE said in a filing on Friday that it plans to sell its entire 15.78 percent stake in SM for 564 billion won (about $435 million) after accepting Kakao’s offer.

Last month, HYBE acquired A 14.8% Invested in SM Entertainment, approx. $335 millionby acquiring a stake from estranged founder Lee Soo Man of SM Entertainment.

The company then produced intended public get extra 25.2% Stake in SM Entertainment – ​​This will bring HYBE’s total holdings to 40% – Through a tender offer for SM minority shareholders.

If successful, this move will cost HYBE again ≈$565 million on SM stock.

However, HYBE’s acquisition plan failed as expected and only successfully acquired one additional 0.98% bet In SM Entertainment, raised its ownership to 15.78% after buying 14.8% bet In February.

Kakao/Kakao Entertainment at the time initiated its own tender offer The price per share for SM shareholders is higher than HYBE’s bid. Kakao wants to acquire as many as 35% SM Entertainment’s approx. $960 million through the process.

Kakao has agreed to purchase 9.05% SM February, by purchasing bonds and new equity issues.However, then Li Xiuman successfully blocked The takeover attempt was made in a Seoul court with an injunction.

According to South Korean media reports, the latter company Kakao expects

HYBE’s attempt to acquire 40% of SM has been met with strong resistance from SM Management of SM And on March 12, the music giant officially ended its bid to acquire SM Entertainment.

HYBE said in a statement at the time that it had suspended the takeover offer following discussions with tech firm Kakao, its rival in the SM takeover process.

According to the statement: “HYBE made this decision after observing signs of overheating in the market due to competition with Kakao and Kakao Entertainment.”

HYBE added that it “also considered the potential negative impact on HYBE shareholder value”.

Continued HYBE’s statement: “HYBE acquired the shares of former chief producer Lee Soo Man and made an offer based on a fair acquisition price range, considering the long-term value of SM, and all possible cost processes that may be incurred during the post-merger integration process. However, with the The competition between Kakao and Kakao Entertainment has intensified, and HYBE believes that the purchase price of SM is beyond the fair purchase price range.”

The news comes as HYBE, SM Entertainment and Kakao each look to expand in the US through acquisitions or partnerships.

According to reports ReutersChairman of HYBE Bang Shi Hyuk explain In a press release two weeks ago, the company “will announce a number of acquisitions and investments throughout the year as part of our efforts to expand our presence in the United States.”He added that the firm is interested in “top-tier” companies Flourish Latin music scene.

He also reportedly said he was “personally satisfied” with the new fan platform agreement with Kakao Entertainment.

(HYBE has already acquired Scooter Braun’s Ithaca Holdings for more than $1 billion in 2021, and HYBE America (now run by Braun) announced last month that it would acquire the Atlanta-born QC The amount is about 300 million US dollars).

Meanwhile, Kakao recently launched a new product partnership and sony musicof Columbia Records Through Kakao Entertainment America’s U.S. distribution network, it “enhances its position in the global market,” according to a media statement.

Also, SM Entertainment disclosethrough a recent investor presentation, plans to acquire a U.S.-based music company to accelerate its global expansion.

SM says it is currently “vetting companies that fit within SM’s genre range” in the US and hopes to expand into hip-hop and R&B.

The company says it plans to spend 200 billion won (see below) on the investment strategy, which would amount to about $150 million at current exchange rates.Global Music Business


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