Seoul: K-pop supergroup BTS’ management agency Hybe said Wednesday it had become the biggest shareholder of embattled rival SM Entertainment, whose founder has been mired in an ugly power struggle within his company.
SM was founded by Lee Soo-man, who is widely referred to as “the godfather of K-pop” and credited for producing key figures in an earlier generation of artists such as BoA, Girls’ Generation and TVXQ, which paved the way for the industry’s current success.
But hints of a power struggle eked out when SM’s co-CEOs — including Lee’s nephew Lee Sung-soo — announced new plans for the company that notably excluded him.
In a regulatory filing on Wednesday, Hybe said it had purchased a 14.8 percent stake in SM Entertainment for 422.8 billion won ($324 million), a move it said aimed at “strengthening competitiveness and creating synergy in the K-pop market”.
The 14.8 percent stake is part of founder Lee’s holdings of 18.5 percent in SM.
Hybe’s purchase on Wednesday comes after an attempt by South Korea’s internet giant Kakao to buy a nine percent stake earlier this month — a move that was quickly challenged by the elder Lee who filed for a court injunction.
Hybe had also offered to purchase a further 25 percent of the company from other shareholders — an announcement met with fierce opposition from SM’s co-CEOs and executives, who accused the entertainment giant of a “hostile takeover”.
In a statement to SM fans, artists, employees and shareholders following the acquisition, Hybe’s CEO Park Ji-won promised full support for SM artists and urged top executives to refrain from making “hasty judgments”.
“We express our regret for causing concern to SM artists,” Park said, adding: “As Hybe respects and cares for our own artists, we will respect and care for SM artists.”
“Hybe and SM Entertainment will work together to create the best company that can stand shoulder to shoulder with the world’s top three major music companies,” he said.
The purchase was made nearly two weeks earlier than its initial schedule of March 6, which Yonhap news agency said likely was an attempt to end the acquisition process smoothly ahead of a SM shareholders’ meeting next month.
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