Direct Appearance by Bang Si-hyuk: "K-pop Is at Risk Like This... That's Why We Acquired SM"

"Not a Hostile M&A... Propagandistic Term"
"BTS Military Service as a Career Turning Point"
SM Entertainment Refutes "Hive's Irrational Structure"

Bang Si-hyuk, chairman of HYBE, appeared on a broadcast himself and warned about the slowdown in K-pop growth, revealing that he jumped into the acquisition battle for SM Entertainment (SM Enter) to overcome this issue.

In an interview video released on the 3rd with American CNN anchor Richard Quest, Chairman Bang said, "Looking at export indicators and streaming growth rates, it is clear that the growth rate of the K-pop genre is slowing down."

He added, "(K-pop) as a genre is experiencing a temporary slowdown in growth, and if left as it is, it could be very risky. From that perspective, there is an aspect of actively jumping into the acquisition of SM Entertainment. (We need) to definitely raise recognition in the global market more than now."

"SM Acquisition Is Not a Hostile M&A... Followed Legal Procedures and Obtained Consent"

Regarding the push to acquire SM Entertainment, Chairman Bang drew a clear line, saying, "This is not a hostile M&A." This was his first mention related to the SM acquisition battle since the joint statement released with former major shareholder Lee Soo-man on February 10, the day the share acquisition was announced.

Chairman Bang explained, "Basically, when a company is acquired against the will of the major shareholder or controlling shareholders, it is called a hostile M&A. We acquired the major shareholder's shares through legal procedures and with their consent. To label this as a hostile M&A is a propaganda term," he asserted.

He further stated, "On the contrary, it is a serious problem when the management team operates and talks about a company with dispersed ownership without the major shareholder's involvement," seemingly targeting the current SM management.

Chairman Bang clarified, "The idea that we are trying to take over the entire (K-pop) industry through this acquisition is misinformation," and explained, "There are concerns about market monopolization in the album market, but if you exclude the volume going overseas, even if you combine the CD sales of SM and HYBE in Korea, it is difficult to become a monopoly."

He said, "I have been very saddened for a long time that a great company like SM did not have good governance," and added, "Through this share acquisition, most of the governance issues have been resolved."

He also described HYBE as "a company well known for helping artists maintain their autonomy and for having good management procedures and processes."

SM Entertainment Refutes Chairman Bang’s Interview, Saying He Distorts the Meaning of Hostile M&A

Lee Soo-man (left), former major shareholder, and Bang Si-hyuk, chairman

After Chairman Bang’s interview was released, SM Entertainment issued a statement that afternoon, rebutting, "Chairman Bang is distorting the meaning of hostile M&A."

SM Entertainment stated, "Hostile M&A refers to a corporate acquisition and merger carried out without the consent of the board of directors responsible for legal management," and added, "Hostile M&A usually takes the form of a public tender offer or proxy fight, which exactly matches the hostile M&A activities currently attempted by HYBE."

SM Entertainment pointed out, "If the two companies merge, a monopolistic single corporate group accounting for about 66% of the total market sales will be created, and such market monopoly by a single company will hinder the diversity and fair competition of K-pop and lead to a decline in industry competitiveness."

Regarding Chairman Bang’s criticism of SM’s governance, SM countered, "We believe HYBE’s governance is neither sound nor rational."

SM Entertainment also said, "HYBE decided on a hostile M&A involving more than 1 trillion won in large-scale funds without conducting any due diligence on SM," and questioned, "We wonder if HYBE’s board of directors, which approved an abnormal agenda, is only loyal to the major shareholder."

"BTS Military Enlistment Has Long Been Prepared as a Career Turning Point"

Group BTS (Bangtan Sonyeondan) [Photo by HYBE]

Meanwhile, on the same day, Chairman Bang also mentioned BTS’s military enlistment.

He said, "From a career perspective, it is not good for any artist to have a long hiatus regardless of their own will," and added, "This is a separate issue from fulfilling military service duties diligently as a Korean and accepting it happily."

He continued, "The idea of making (military service) a 'career turning point' has been prepared for a very long time," and added, "Since they cannot remain BTS forever, various changes are necessary as the artists grow."