HYBE Sells 2.21 Million SM Shares in Block Deal
Shares Sold at 110,000 Won Each to Tencent Affiliate
Complete Exit Two Years After Management Rights Battle
Tencent Expands Investment in K-Content
HYBE has sold its entire stake in SM Entertainment, approximately 2.21 million shares, to a subsidiary of China's Tencent. By disposing of all its SM shares, which it had held strategically after withdrawing from the management rights acquisition battle with Kakao, HYBE has effectively ended its equity relationship with SM.
According to a disclosure filed with the Financial Supervisory Service on May 27, HYBE transferred about 2.21 million common shares of SM to Tencent Music, a Tencent affiliate, at a price of 110,000 won per share through a block deal (off-hours bulk transaction). The total sale amount is estimated at approximately 243 billion won. As a result, HYBE's stake in SM has dropped to 0%, and the possibility of future strategic collaboration is now considered virtually over.
In early 2023, HYBE had acquired a 14.8% stake in SM in an attempt to take over management rights. However, after Kakao secured friendly shares and declared its intention to acquire management control, HYBE withdrew from the acquisition race. Since then, it had retained only a portion of the shares for strategic purposes.
Industry observers believe that through this sale, HYBE has secured liquidity and clearly signaled its intention to sever shareholder ties with its competitor. Recently, HYBE has also been focusing on strengthening its own intellectual property (IP) with groups such as NewJeans and Le Sserafim, as well as expanding the business of its U.S. subsidiary, HYBE AMERICA.
Meanwhile, with this block deal, Tencent has become the third-largest shareholder of SM, following Kakao and Kakao Entertainment. Tencent has already expanded its influence within the K-content ecosystem by investing in various domestic content companies such as YG PLUS and Kakao. This acquisition of SM shares is also seen as part of its strategy to expand its global entertainment influence.
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