[Asia Economy Reporter Lee Seung-jin] HYBE has acquired a 14.8% stake from former Chief Producer Lee Soo-man, becoming the largest shareholder of SM Entertainment. In response, Kakao and SM have formed a board of directors composed of mergers and acquisitions (M&A) experts to counterattack.
Kakao Appoints Bae Jae-hyun, Leader of Melon ‘Big Deal’, as Inside Director
On the 22nd, Kakao announced it will appoint six directors at the shareholders' meeting scheduled for next month. Among them, the newly appointed board members stand out. Although the agenda for the upcoming shareholders' meeting does not include matters related to the SM acquisition, the profiles of the new board candidates reveal a strategy to aggressively respond to HYBE’s acquisition of SM.
Among the director candidates, Bae Jae-hyun is the most notable. He is an investment expert formerly of CJ. He joined Kakao in 2015 as head of the Big Deal team. He played a key role in the Big Deal team that led the large-scale M&A during Kakao’s acquisition of Melon. He later served as head of investment strategy and Chief Investment Officer (CIO). Recently, he has played a central role in securing large-scale investments worth over 1 trillion won and acquiring SM shares.
Additionally, Jeong Shin-ah, CEO of Kakao Ventures, newly appointed as a non-executive director candidate, and Shin Seon-kyung, a lawyer from the law firm RIO, nominated as an outside director candidate, also stand out. Jeong Shin-ah is an expert in investment and finance, while Shin Seon-kyung is evaluated to have the capability to proactively manage legal risks related to new business expansion.
SM Counters HYBE with New Management Team
On the 22nd, SM nominated its CFO Jang Cheol-hyeok, Marketing Center Head Kim Ji-won, and Global Business Center Head Choi Jeong-min as inside director candidates late in the afternoon. All current inside directors, including co-CEOs Lee Sung-soo and Tak Young-joon, decided not to seek reappointment and will step down.
Candidate Jang Cheol-hyeok is a certified public accountant and financial expert. Amid the recent management dispute, he appeared personally on YouTube during major announcements on behalf of co-CEOs Lee Sung-soo and Tak Young-joon, demonstrating his presence. Especially, by appointing a financial expert as an inside director, it is interpreted as SM’s intention to focus on the legal battles with former Chief Producer Lee over the legitimacy of issuing new shares and convertible bonds.
Candidates Kim Ji-won and Choi Jeong-min have each worked at SM for over 15 years and have deep internal knowledge. Kim Ji-won’s strengths lie in over 20 years of experience in media, press networks, and fan club management, and she is expected to lead the upcoming public relations battle. Choi Jeong-min has worked at SM for 20 years and will play a key role in the SM 3.0 strategy.
Jang Yoon-joong, Vice President of Global Strategy at Kakao Entertainment, was selected as a non-executive director candidate. He is a recommended figure from Kakao, a core strategic partner in the SM 3.0 strategy, signaling a move to strengthen the alliance between Kakao and SM.
On the morning of the 22nd, at the Seoul Eastern District Court in Songpa-gu, Seoul, the legal team from the law firm Hwawoo, representing former SM Chief Producer Lee Soo-man, is heading to the courtroom for the hearing on the injunction request to prohibit SM's issuance of new shares and convertible bonds. [Image source=Yonhap News]
HYBE: “We Hope SM Management Makes Rational Decisions”
On the 22nd, HYBE became the largest shareholder of SM, 12 days ahead of the originally scheduled date. The strategy is to proceed swiftly and take the lead in the public opinion battle.
After securing the stake, HYBE immediately began efforts to win over SM employees. HYBE CEO Park Ji-won issued a statement explaining, “HYBE’s vision aligns with the direction of SM 3.0.” This was a rebuttal to SM CFO Jang Cheol-hyeok’s claim on YouTube on the 20th that SM’s new growth plan, ‘SM 3.0,’ would be disrupted by HYBE’s acquisition.
Park emphasized, “HYBE respects the legacy SM has built and the value of diversity in creativity,” adding, “We will actively support independent content with unique colors to lead global trends by leveraging HYBE’s business model and network capabilities.”
He also issued a warning to SM’s current management, stating, “We hope that short-term decisions affecting business direction or rash judgments and actions by some executives do not cause ongoing confusion.”
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