Bang Si Hyuk, chairman of HYBE, expressed his support for SM’s former executive producer Lee Soo Man by acquiring a stake in SM Entertainment through an official statement.
HYBE announced on February 10 that it has signed a contract to acquire 14.8% of SM’s 18.46% stake held by SM founder Lee Soo Man for 422.8 billion won ($386,000,000). HYBE has become the largest shareholder of SM, and will also conduct a tender purchase of shares in SM Entertainment held by minority shareholders in the future.
Check out the full statement of HYBE below!
HYBE plans to make every effort to advance SM’s operating structure in connection with the “global-level governance structure” announced by SM on January 15.
Meanwhile, while former executive producer Lee Soo Man and SM’s current management are currently at odds over SM management rights, Kakao announced on February 7 that it secured a 9.05% stake in SM by acquiring 1.23 million new shares issued by SM in the form of a third-party paid-in capital increase and securing 1.14 million shares (based on the conversion of ordinary shares). The total amount of the stake acquisition is 17.152 billion won ($13,000,000), and Kakao has become the second-largest shareholder of SM.
In response to this, SM’s co-CEO Lee Sung Soo and Tak Young Joo said , “The strategic alliance with Kakao is based on management judgment to accelerate the implementation of the SM 3.0 strategy, and has nothing to do with the management dispute claimed by the largest shareholder (former executive producer Lee Soo Man).”
However, the former executive producer Lee has already expressed opposition to Kakao’s acquisition of a stake in SM. On February 7, the legal representative for former executive producer Lee Soo Man said, “SM is now in a management dispute between its largest shareholder, Lee Soo Man, and All-Line Partners, which advocates shareholder activist funds. It is clearly illegal for SM’s board of directors to issue new shares and convertible bonds to a third party. On January 20, SM’s co-CEO Lee Sung Soo and Tak Young Joon agreed to Alain Partners’ proposal without any consultation with the largest shareholder, intensifying the management dispute against the largest shareholder. SM’s board of directors unilaterally allocated new shares and convertible bonds to third parties to expand their stakes and secure an edge in the control competition.”
On the other hand, SM’s current management defined HYBE’s acquisition of a stake in former executive producer Lee Soo Man as a hostile M&A. In a statement released before the official announcement of HYBE’s stake acquisition on February 10, they said, “As soon as the future core strategy, ‘Like Planning’s single production to multi-production center/label system, SM 3.0’, was announced, it is being discussed not only SM’s intense concerns and efforts but also the values it has pursued with artists. As SM is a company that has proudly led K-pop by numerous SM artists and is once again set to become a global entertainment-leading fan and shareholder-centered company through the SM 3.0 era, we work together with all executives and artists to clarify our opposition to all hostile M&As reported this time.”
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