Hive Becomes Largest Shareholder of SM... Lee Soo-man Acquires Shares 12 Days Earlier

Secured 14.8% Stake 12 Days Ahead of Schedule
HYBE "No Hostile Intentions Toward SM Management"

[Asia Economy Reporter Kim Heeyoon] HYBE, the agency of the group BTS, has become the largest shareholder of SM Entertainment.

On the 22nd, HYBE announced, "We have paid for and acquired 14.8% of the shares held by SM Entertainment founder and former chief producer Lee Soo-man, becoming the largest shareholder of SM Entertainment."

Earlier, on the 10th, HYBE signed a contract to purchase a 14.8% stake from Lee Soo-man, the founder and former chief producer of SM, for 422.8 billion KRW.

During the share acquisition process, HYBE resolved governance issues involving SM Entertainment and former chief producer Lee Soo-man. SM Entertainment will move forward as a company with exemplary governance and one that prioritizes shareholder rights.

Originally, HYBE's scheduled date for acquiring SM shares was March 6, but the payment was made 12 days earlier, finalizing the transaction.

Below is the full statement from HYBE CEO Park Ji-won

To the fans, artists, members, and shareholders of SM Entertainment,

Hello. This is HYBE CEO Park Ji-won.

As of today (February 22, 2023), HYBE has completed the acquisition of a 14.8% stake held by SM Entertainment founder and former chief producer Lee Soo-man, becoming the largest shareholder of SM Entertainment.

As we mentioned on February 10, HYBE resolved governance issues involving SM Entertainment and former chief producer Lee Soo-man during the share acquisition process. SM Entertainment will move forward as a company with exemplary governance and one that prioritizes shareholder rights.

Today, I would like to speak to SM Entertainment’s fans, artists, members, and shareholders about the shared corporate philosophies of HYBE and SM Entertainment and the various synergies we can create together going forward.

Synergies and innovation driven by the alignment of corporate philosophies

HYBE and SM Entertainment are pioneers and leaders in the K-POP industry, achieving global success in the music industry. HYBE’s vision, under the mission "We believe in Music," aims to be the world’s best entertainment lifestyle platform company based on music, while SM 3.0 advocates for a leap forward as a fan- and shareholder-centered global entertainment company. These directions align closely. Furthermore, the combination of the two companies’ corporate cultures that emphasize creativity and content will drive further innovation in the global market.

Ensuring complete creative autonomy through a multi-label system

HYBE has successfully operated various labels with independent authority. The core of this multi-label system is to guarantee complete autonomy over creations that embody the creator’s soul. HYBE respects the legacy SM Entertainment has built and values diversity in creativity. We will actively support SM Entertainment’s unique content with its distinct identity to lead global trends by leveraging HYBE’s business model and network capabilities.

Efforts to become a game changer in the global music market

HYBE will actively support SM Entertainment artists’ overseas expansion through accumulated know-how and global networks. We will share expertise in leading overseas K-POP markets such as the U.S., Latin America, and India, and especially create an environment where more artists can showcase diverse music based on global hubs. Additionally, SM Entertainment’s experience in China, Japan, and Southeast Asia will be a great asset to HYBE artists. Together, we can become the most innovative game changers in the global music market.

Moreover, the expansion of HYBE’s global platform ‘Weverse’ and SM Entertainment’s ‘Bubble,’ which lead the market with different charms, will secure competitiveness worldwide beyond Korea. Through collaboration across various solution sectors such as performances, distribution, storytelling, and new businesses, the two companies will create new opportunities.

While K-POP continues to grow and gain attention in the global popular music market, there are still many fans worldwide to meet and infinite content and enjoyable experiences to create. The various challenges and relentless efforts that have shaped today’s K-POP must continue to shine on the world stage. Let us unite HYBE and SM Entertainment to build the best company that stands shoulder to shoulder with the world’s top three major music companies.

Lastly, I understand that recent controversies surrounding the company may have caused anxiety and concern among SM Entertainment’s fans, artists, members, and shareholders. HYBE respects the direction presented by the ‘SM 3.0’ growth strategy and the values and vision created together by SM Entertainment’s members and artists.

In particular, I express regret for any worries caused to SM Entertainment artists. Just as HYBE respects and cherishes its own artists as a management company, we will approach SM artists with respect and consideration. We will spare no effort and provide full support to create a positive future together by mobilizing HYBE’s management capabilities.

This is a crucial period of change for both companies. I hope that short-term decisions affecting business direction or rash judgments and actions by some executives will not cause ongoing confusion. I hope the management will make wise and rational decisions so that the shared values and business directions of both companies will not be affected by short-term decisions.

One of HYBE’s core DNAs is the belief in ‘winning together,’ the ‘Win Together’ mindset. From today, HYBE will actively communicate with fans, artists, members, and shareholders under the belief of succeeding together with SM Entertainment, continuously raising the value and influence of the K-POP industry on the global stage.

This content was produced with the assistance of AI translation services.