Jeff Kravitz/FilmMagic
- Iconic boy band BTS's agency has offered to buy a majority stake in a key K-pop rival.
- Hybe Co. purchased a 14.8% stake in SM Entertainment and has offered to buy a further 25% share.
- SM's founder Lee Soo-man has backed the purchase as he fights against his own shareholders.
The agency behind iconic K-pop band BTS is seeking to snap up a controlling stake in a key rival as it aims to come out on top in an increasingly ugly battle for South Korea's music industry.
A filing shared ahead of the opening of the South Korean stock market shows Hybe Co., which manages boy band BTS, bought a 14.8% stake in SM Entertainment, which oversees acts including Super Junior and Girls' Generation.
That was followed by another filing where the company offered to buy a further 25% stake in the group, for a total of 1.14 trillion won ($900 million). Should this transaction go through, it would make Hybe the controlling shareholder in the group.
In its initial filing, Hybe said the purchase of shares was a means of "strengthening competitiveness and creating synergy in the K-pop market."
But the hostile acquisition attempt also represents the latest in a fraught battle between Hybe, SM Entertainment, and streaming company Kakao for control of the K-pop market.
SM Entertainment's founder, Lee Soo-man, who is regarded as the "godfather of K-pop" for his work in the early 2000s, is fighting against shareholders and activist investors over his governance of the company.
Kakao offered to buy a 9% stake in a deal backed by SM shareholders. Lee, however, opposed the takeover with an injunction, per Bloomberg and The Korea Herald.
SM's shareholders issued a statement opposing Hybe's 25% offer, while activist investor Align said it was too low.
Hybe, which also manages Billboard-charting NewJeans, voiced its support Friday for Lee's own strategic initiatives including "metaverse, a multi-label system, and the sustainable vision campaign," it said in a joint statement with Lee, signalling an alliance against SM's board in the fight for the heart of K-pop.
The news of Hybe's approach was greeted with overwhelming approval by investors. SM Entertainment's share price jumped by more than 16% on the KOSDAQ stock exchange on Friday. The challenge against Hybe by SM and Align helped the K-Pop giant pare back its own 10% gains, closing down 1.5%.