SM "Hybe's Hostile M&A Will Push Our Artists to Lower Priority" Public Relations Battle

Through Public Announcement "Hive Attempts to Break Off Cooperation with Kakao"
Concerns Over Damage to Corporate Value, Shareholder Interests, and Loss of Individuality and Values

[Asia Economy Reporter Kim Heeyoon] SM Entertainment has expressed opposition to HYBE's additional tender offer for its shares, stating that "our unique individuality and values will disappear."

On the morning of the 20th, SM announced in a 'Statement of Opinion on the Tender Offer' that "this tender offer is being unilaterally conducted by the tender offeror (HYBE) based on a separate agreement with the company's largest shareholder (former Chief Producer Lee Soo-man), without any consultation or discussion with our company."

SM, defining HYBE's move as a "hostile tender offer," criticized, "This undermines the efforts of artists and employees who contributed to growing into a leading entertainment company spearheading K-pop culture, and negatively impacts corporate value," adding, "There is serious concern that it will harm the interests of shareholders and other stakeholders."

SM continued, "According to our core business promotion strategy, potential corporate value growth exceeding the tender offer price (120,000 KRW) will continue," emphasizing, "We will inherit and maintain our unique legacy and identity while securing new growth engines and further developing our IP (intellectual property) monetization and global business capabilities."

Furthermore, SM pointed out, "The tender offeror has not presented a concrete plan on how to enhance the company and shareholder value in the future," and criticized, "Rather, it is attempting to create the appearance of a management dispute in alliance with the largest shareholder (Lee Soo-man), thereby sabotaging the establishment of a business cooperation relationship between our company and the Kakao Group."

SM raised concerns, stating, "If the tender offeror secures management rights through this tender offer, it will cause setbacks in pursuing various business plans aimed at improving governance and enhancing corporate value that our company has sought to realize."

SM added, "If HYBE gains management rights, our company's business capabilities are highly likely to weaken, as our affiliated artists may be deprioritized in music and content production," and elaborated, "As a leading comprehensive entertainment company that has led K-pop culture, it is inevitable to worry that the unique individuality and values developed by our company and artists will disappear."

On the 3rd of this month, SM announced the 'SM 3.0' vision, which excludes former Chief Producer Lee Soo-man from the album production process and establishes production centers and internal and external labels to accelerate album production.

Since HYBE announced on the 10th that it would acquire shares from the former Chief Producer, SM's stock price has been soaring. As HYBE proceeds with an additional tender offer, as of 9 a.m. today, SM's tender offer price has exceeded 120,000 KRW.