SM Entertainment CFO Criticizes Hybe’s ‘Hostile Takeover’ Effort

Earlier this month, BTS company Hybe (KRX: 352820) bought almost 15 p.c of SM Leisure (KRX: 041510) in a deal that was reportedly price $324 million. Now, with Hybe having set its sights on scooping up a controlling 40 p.c stake, SM is firing again in opposition to the “hostile takeover.”

The much-publicized SM Leisure funding represents simply the most recent in a collection of growth initiatives from Seoul-headquartered Hybe, which has in 2023 quietly made Scooter Braun the only CEO of Hybe America and bought High quality Management.

Upon asserting the latter deal, Hybe – the bestselling act of which stays on hiatus – emphasised its aim of growing “a really world leisure platform.” And SM, the corporate behind Ok-pop stars corresponding to Exo and Purple Velvet, kicked off February by detailing a seemingly far-reaching “3.0” reorganization.

However this evolution, nonetheless, the Woollim Leisure proprietor SM is making clear that it doesn’t approve of Hybe’s sizable funding or broader takeover plans, as talked about on the outset. To make certain, SM Leisure CFO Jang Cheol-hyuk took purpose on the buying firm in a 15-minute YouTube video, aptly entitled “The explanation why SM is in opposition to HYBE’s hostile takeover.”

“As quickly as SM’s new imaginative and prescient, SM 3.0, was introduced,” Jang Cheol-hyuk communicated, per SM’s translation of his Korean-language remarks, “the most important shareholder offered his stake, and a hostile takeover try by a competitor began.

“That is an try that ignores not solely the fierce deliberation and efforts of the 600 SM staff who’ve dreamed of turning into the number-one leisure firm on the earth, but in addition the values and satisfaction of SM, which it has pursued along with the followers and artists,” he continued.

Then, after recapping the circumstances surrounding Hybe’s preliminary 14.8 p.c funding, the next tender supply, and the “empty” promise that SM would retain unbiased administration post-buyout, the exec rattled off all method of qualms with the takeover.

“Hybe is already saturated with the artists from its labels,” the SM Leisure CFO claimed. “Consequently, SM artists can have no selection however to be placed on a decrease precedence. … Some say there can be a synergy if SM artists joined Hybe’s WeVerse platform. Nevertheless, as talked about earlier than, this may merely create extra income for Hybe with none advantages for SM.”

Lastly, Jang Cheol-hyuk made the case that Ok-pop’s notoriously passionate fanbase will endure ought to Hybe’s takeover come to fruition.

“In the end, Ok-pop followers can be affected essentially the most by the monopoly,” he relayed after highlighting the numerous market share that the mixed firm would possess. “SM prices cheap costs for live performance tickets to permit a broader scope of followers to get pleasure from cultural performances.

“In the meantime, Hybe has taken benefit of its place within the Ok-pop market to nearly double the worth of live performance tickets, as reported within the information a number of instances just lately. … The consolidation of SM and Hybe will speed up ticket value will increase, including burden to followers who love and assist Ok-pop.”

For sure, the Supertone proprietor doesn’t really feel the identical approach, and regardless of the considerations expressed by SM (in addition to a possible bidding battle involving Kakao Leisure, which acquired over 9 p.c of SM two weeks in the past), Hybe CEO Park Ji-won in a Bloomberg interview described the takeover as a way of assuring Ok-pop’s continued development and relevance on the world stage.

Hybe inventory dipped by 1.3 p.c throughout as we speak’s buying and selling hours and was price ₩182,100 (presently $139.30) per share when the market closed. SM Leisure inventory, for its half, added 1.4 p.c to its worth to complete at ₩123,500 ($94.46) per share.