Com2uS Anticipates Metaverse Business Collaboration Led by K-Content
Some View SM as a White Knight, Com2uS States "Not for Voting Rights Exercise"
"SM Currently Undervalued, Invested for High Growth Potential"
[Asia Economy Reporter Seungjin Lee] Com2uS is investing in South Korea's leading entertainment company, SM Entertainment (hereinafter SM). Although it stated that the investment is for simple investment purposes and not for exercising voting rights, cooperation and business expansion between the two companies are expected in content businesses utilizing metaverse (extended virtual world), non-fungible tokens (NFT), and more, which Com2uS is currently pursuing.
Com2uS announced on the 1st that as of the 31st of last month, it acquired approximately 990,000 shares of SM, accounting for about 4.2%. With this investment, Com2uS is on the verge of reporting ownership of more than 5% of shares, following the largest single shareholder producer Lee Soo-man (18.46%), the National Pension Service (7.81%), and KB Asset Management (5.12%).
Com2uS Expands Entertainment Investment, Maximizes Synergy with SM
Through this investment in SM, Com2uS is expected to actively engage in content businesses utilizing metaverse, non-fungible tokens (NFT), and more. Com2uS has been expanding its business areas by investing in various entertainment and content businesses. Last year, it acquired the video content company Wysiwyg Studios, and this year it secured management rights of the K-pop performance platform company MyMusicTaste. Recently, it also acquired new shares of RBW together with its subsidiary Wysiwyg Studios. RBW is an entertainment company to which Oh My Girl and Mamamoo belong.
Additionally, Com2uS has begun to actively promote blockchain businesses such as P2O (Play to Own) games, NFT marketplaces, and metaverse based on its own blockchain mainnet, XPLA. SM is also accelerating the global spread of Korean popular culture through expansion into digital metaverse businesses such as the ‘Gwangya Project,’ which utilizes visual effects (VFX), virtual reality, and virtual studios.
Com2uS expects that through various future consultations with SM, it will enable broad business collaboration not only in expanding the global market for K-content but also in blockchain and metaverse fields. A Com2uS official explained, “SM has top-tier stars who have led the Korean Wave for a long time and possesses global intellectual property (IP), securing a highly loyal customer base with enthusiastic fandom worldwide. We also expect tremendous growth potential through new business expansion such as cultural content, metaverse, and NFT.”
"Investment Not for Exercising Voting Rights"
Some speculate that Com2uS’s accumulation of shares is to assist producer Lee Soo-man, who is under pressure from the activist fund Align Partners. SM is currently in a dispute with the activist fund Align Partners. With only about two months left until the record date for voting rights at next year’s regular shareholders’ meeting, Com2uS’s acquisition of shares is expected to serve as friendly shares for SM.
The terms of office for three inside directors?CEO Lee Sung-soo, COO Tak Young-joon, and CCO Park Joon-young?who are personnel close to producer Lee Soo-man, will expire before next year’s regular shareholders’ meeting. To extend their terms, friendly shares supporting the producer are needed, and it is analyzed that the producer secured Com2uS as a major shareholder for this purpose.
Regarding this, Com2uS explained that it made the investment based on the judgment that SM’s current value is relatively undervalued and that its future growth potential is high. It also drew a clear line, stating that the investment was not made for exercising voting rights in a specific direction at the shareholders’ meeting, such as acting as a ‘white knight,’ and that no decisions have been made in this regard.
A Com2uS official said, “This investment was made from a neutral standpoint based on the judgment that SM’s future growth potential is higher than its current stock price value. Additionally, the possibility of various discussions to maximize the value of each company through future business synergy creation was also considered as a secondary factor. We hope to lead the future cultural industry together by combining the strong global IP power, content, and business know-how of each company.”
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