Hybe to Sell SM Entertainment Stake After Losing to Kakao in K-Pop Bid Battle

Hybe Corp., the talent powerhouse behind K-pop sensation BTS, said on Friday that it will sell its share stake in agency rival SM Entertainment. The move would finalize Hybe’s admission of defeat in a dramatic takeover battle in which it was out-gunned by Korean tech leader Kakao Corp.

Hybe initially bought a 14.8% stake in SM in February from SM’s founder and K-pop pioneer Lee Soo-man. Hybe expected to be able to buy the remaining 3% tranche held by Lee according to agreed conditions and then launched an open offer to other shareholders to buy a further 15%.

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But SM’s management opposed Hybe’s quasi-takeover and harnessed Kakao and its subsidiary Kakao Entertainment with a range of measures. These included a content distribution deal and the sale of newly issued shares and bonds to the Kakao pair.

While a court ruled against SM creating new shares simply for the purpose of defeating a takeover bid, seemingly handing the initiative to Hybe and Lee, Kakao hit back with a significantly richer offer to all shareholders for up to 35% of SM’s currently existing equity. On March 12, Hybe admitted that its tender was insufficient and withdrew it.