HYBE will “ensure” SM Entertainment’s independence, CEO reportedly says

hybe park ji-won lee soo-man

The CEO of South Korean entertainment giant HYBE, which is moving to become the largest shareholder in SM Entertainment, has reportedly said the latter label will be able to retain its independence.

Last week, HYBE announced that it had struck a deal to buy 3.5million shares in SM Entertainment from its founder Lee Soo-man and therefore acquire a 14.8 per cent stake in the agency, which is one of K-pop’s longtime “Big Three” labels alongside JYP Entertainment and YG Entertainment. The deal, once finalised on March 6, will make HYBE the largest shareholder in rival label SM.

HYBE has also offered to purchase another 25 per cent of SM from minority shareholders. However, SM’s top executives, including its co-CEOs, have stated their opposition to any “hostile takeover from outsiders, including HYBE”.

At a briefing session held for HYBE employees on Monday (February 13), CEO Park Ji-won reportedly shared that SM Entertainment would be able to retain its independence following its acquisition by HYBE.

“We respect SM’s legacy. We’ll ensure SM’s independence… HYBE has already proved the value of its multi-label system,” Park said, as reported by Yonhap News Agency.

There are several labels currently operating under HYBE, including Big Hit Music, Pledis Entertainment and Source Music, the latter two of which were acquired by HYBE. Through these labels, HYBE’s current roster includes artists like BTS, Tomorrow X Together, SEVENTEEN, LE SSERAFIM and more.

The Yonhap report cites industry sources who also claim that Park said HYBE intends to help SM “keep and expand” its own value. Park also reportedly announced that SM founder Lee Soo-man, from whom HYBE had agreed to buy shares, will no longer participate in the company’s management and production and “take no more royalties”.

According to a Reuters report yesterday (February 13), South Korean regulators are closely monitoring the HYBE and SM deal, noting its unprecedented scale.

“Though there have been acquisition deals involving small and medium-sized entertainment agencies, a deal on this scale is a first for us,” said Im Young-kwang, the head of the international mergers and acquisitions division at the Korea Fair Trade Commission.

“When a merger and acquisition takes place, we look at various businesses under these corporations, including management, record sales, streaming, tours and merchandise,” Im told Reuters.

“We look at whether they could gain market dominance to make sweeping changes in the prices and quality of their services in the market.”

Days before HYBE announced its acquisition of Lee’s SM shares, South Korean tech company Kakao also revealed that it would soon acquire a 9.05 per cent stake in the agency, which would have made it the second-largest shareholder of the company after Lee Soo-man.

In response, Lee’s legal counsel alleged that Kakao’s acquisition was an “act of illegality”. He has since filed an injunction to stop the transaction.

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