A live performance from SM Entertainment act Aespa. Photo Credit: Plumflower Snow
Hybe has officially moved to sell its remaining SM Entertainment stake – encompassing almost 10% of the rival K-pop agency – to Tencent for north of $175 million.
The Big Hit parent disclosed the sizable selloff in a regulatory filing, which regional outlets promptly covered. According to the document, Hybe intends to exit its SM position altogether, exchanging 2.21 million remaining shares for a cool ₩243.35 billion (currently $176.85 million).
Per Google’s translation of the same text, the trade will take place after the market closes this coming Friday, May 30th. While Hybe doesn’t appear to have identified the precise reasons behind the selloff – its second such divestment in a year – the writing has been on the wall for some time.
To be sure, the Belift Lab owner only secured an interest in SM as part of an ugly takeover battle. Kakao, itself partially owned by Tencent, ultimately emerged victorious in that much-publicized showdown.
Post-takeover confrontation, there doesn’t seem to be a compelling reason for Hybe to possess a piece of SM. Notably, the forthcoming stock sale will bring a per-share price of $79.94/₩110,000, up from $65.40/₩90,000 or so when Hybe shaved about 3% of its SM position in May 2024.
(Earlier in 2024, however, Hybe had purchased close to 900,000 different SM shares from founder Lee Soo Man.)
On the opposite side of the transaction, Tencent Music’s latest earnings report emphasized the company’s growing number of tie-ups and artist-specific initiatives in K-pop. Among those initiatives are Babymonster’s “debut pop-up store in mainland China” and Aespa’s “first-ever exhibition” in China, to name a couple.
Against this backdrop – and bearing in mind the relevant talent’s global appeal – it’s not a bad idea for Tencent proper to pick up an SM interest. And the investment may well be indicative of the Universal Music stakeholder’s music-space strategy moving forward.
(Plus, maintaining a positive professional relationship with Tencent won’t hurt Hybe, which is continuing to push into gaming. As something of an aside, it’s worth noting that Hybe chairman Bang Si-hyuk’s cousin Bang Jun-hyuk is the founder of South Korean mobile-gaming giant Netmarble, about 18% of which belongs to Tencent.)
When trading wrapped today, SM Entertainment stock (KOSDAQ: 041510) was down 2.1% at $94.40/₩129,900 per share; the price still represents a nearly 82% boost from 2025’s beginning. Hybe stock (KRX: 352820), in part due to the expansion-minded business’s strong Q1 financials, is also up big on the year.
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