SEOUL, South Korea (AP) — Hybe, the South Korean entertainment company behind K-pop sensation BTS, said Wednesday that it has completed its acquisition of a 14.8% stake in rival SM Entertainment, making it SM’s largest single shareholder.
The acquisition was finalized even as SM Entertainment accused Hybe staging a hostile takeover to control the firm by purchasing shares from Lee Soo-man, SM’s founder. Lee’s influence in the firm has waned after an activist fund successfully campaigned for stricter oversight of its corporate governance.
Hybe earlier said it plans to purchase a further 25% of SM shares from investors at 120,000 won per share, which would take its total stake to almost 40%.
In an open letter to “fans, artists, employees and shareholders” of SM Entertainment on Wednesday, Hybe CEO Park Jiwon said that SM will move to become a company with a “transparent governance structure that prioritizes shareholder value.”
SM will be given “complete autonomy” when it comes to creative work akin to the other labels operated by Hybe, he said.
He said Hybe would also actively support SM artists’ endeavors. SM is behind popular K-pop acts such as boy-group NCT and girl-group aespa.
On Monday, SM’s CFO Jang Cheol-hyuk published a YouTube video criticizing Hybe’s takeover bid, arguing that such a move would lead to a monopolization of the industry, rising costs for fans. SM’s artists might be at a disadvantage to Hybe’s artists, he said.
Combined, both SM and Hybe account for 70% of revenues from albums and digital music in the K-pop industry.
“A lot of indicators of market share imply that HYBE’s acquisition of SM will undermine fair competition, which clearly shows that this acquisition is unfair,” Jang said. “Ultimately, K-pop fans will be the ones that will be most affected by the monopoly.”
Hybe’s bid for a bigger stake in SM came days after technology firm Kakao Corp said it would buy a 9.05% stake in SM through a rights offering and convertible shares and become a strategic partner of SM. SM had planned to expand its IP monetization and leverage Kakao’s messaging, social and entertainment platforms.