SM Entertainment girl group Aespa. Photo Credit: 이터널 리턴
Though SM Entertainment has thwarted a takeover attempt from K-pop rival Hybe, the effects of the companies’ months-long dispute are still being felt, as South Korean regulators have reportedly raided SM’s headquarters in connection with a stock-manipulation investigation.
The Yonhap News Agency just recently shed light upon this newest twist in the much-publicized showdown between SM Entertainment (the professional home of acts such as Aespa and Super Junior) and BTS agency Hybe. During February and a good chunk of March, the mentioned businesses (as well as Kakao Corp.) engaged in a back-and-forth battle for control of SM.
Hybe, which had earlier in 2023 bought Quality Control and tapped Scooter Braun to lead its stateside operation, emphasized its ambitious global-expansion plans when explaining the reasons behind the takeover attempt. In turn, SM described the move as “hostile.”
After buying 14.8 percent of SM from founder (and former chief producer) Lee Soo-man, Hybe then rolled out a tender offer – and publicly criticized SM’s execs – in an effort to increase the stake to a controlling 40 percent interest.
But said offer drew little investor participation, and Kakao, which had to Hybe’s dismay been negotiating a collaborative agreement with SM all the while, subsequently spearheaded a comparatively expensive tender offer.
Ultimately, Hybe in mid-March called off the takeover attempt, citing potential signs of an overheating market. (Both the tender offers were well above SM stock’s per-share value at the same point in 2022, and though the company’s stock price has leveled off with the conclusion of the battle for control, it still marks an approximately 60 percent boost from six months ago.)
Lastly, Hybe sold a piece of the noted SM interest to Kakao, and the deal enabled the latter entity to hit the aforesaid 40 percent ownership threshold needed for control. As part of the resolution, the involved companies reportedly finalized some sort of collaborative agreement.
And while the complete details of the tie-up remain to be seen, it emerged this week that SM Entertainment artists will debut on Hybe’s WeVerse social platform later in 2023.
In spite of the cooperation, however, regulatory officials have reportedly raided SM’s Seoul headquarters amid a stock-manipulation probe set in motion by a formal complaint from Hybe, as highlighted at the outset.
According to Yonhap, the raid was conducted specifically by the Financial Supervisory Service (FSS), which is said to be investigating whether Kakao had “manipulated stock prices in the process of acquiring shares of the K-pop powerhouse” SM. Hybe reportedly levied the underlying complaint back in February – or at the height of its dispute with SM and Kakao.
FSS raided Kakao’s own offices towards March’s beginning, per the same source. But details about the investigation’s precise scope – and the potential impact on the involved companies – appear limited at present. Needless to say, it’ll be worth monitoring the situation, which could potentially affect the joint initiatives of SM, Kakao, and Hybe, moving forward.