Hive announced on the 10th that it has signed a contract to acquire 14.8% of the shares held by major shareholder Lee Soo-man, the founder of SM, for 422.8 billion won.
SM Entertainment was a leader in Korean k-pop, and the K-pop industry is set to create a mega “dinosaur” agency with BTS, Seventeen, EXO, and NCT under one roof.The deal will make Hive the largest shareholder of SM.Hive is home to popular K-pop stars such as SEVENTEEN, TOMORROW X TOGETHER, ENHYPEN, New Jin’s, and Le Seraphim, led by BTS. SM also has a number of competitive IPs (intellectual property rights) such as TVXQ, Super Junior, SHINee, EXO, NCT, and Espa, so their combination is expected to have a big impact on the K-pop market.Regarding the deal, Hive said, “The acquisition of SM is to unite the global capabilities of the two companies to become a game changer in the global popular music market.”SM has been leading the K-pop market, including BoA, who pioneered Japanese municipalities, starting with the first-generation idol H.O.T. that triggered the word “Korean Wave.” Hive has played a key role in K-pop’s global popularity by producing world star BTSs.”Chairman Bang Si-hyuk, founder and largest shareholder, and former SM executive producer Lee Soo-man formed a consensus on ways to share concerns about K-pop’s future and seek solutions,” Hive said. “One of the results was the stock transfer contract (about 400 million dollars).” Chairman Bang Si-hyuk expressed respect for Lee Soo-man’s development of K-pop as an industry in the process, Hive said. He stressed that he also expressed his willingness to realize Lee Soo-man’s global vision.
Chairman Bang Si-hyuk said, “Hive fully sympathized with the strategic direction such as the implementation of metaverse, establishment of a multi-label system, and vision campaign to save the Earth,” adding, “We will further expand K-pop’s status in the global market by investing Hive’s capabilities.”With the acquisition, Hive will also put a massive sword on SM’s operating structure.
Hive said, “We have confirmed Lee Soo-man’s willingness to improve SM’s governance structure,” adding, “Hive will play an active role in SM’s governance improvement process as it has already led industry advancement such as multi-label strategy operation and fandom platform development.”Lee Soo-man decided to receive some fees for three years from the end of the contract between private production company Like Planning and SM, but decided not to receive them during the agreement with Hive.Hive explained, “It is a measure of his willingness to improve SM governance,” adding, “Lee Soo-man has decided to fully cooperate in improving the governance structure by transferring his stake in SM affiliates to Hive.”Hive also added that it responded by investing additional funds in improving its governance structure through the reorganization of its stake in affiliates.Hive said it will also launch a tender purchase of shares held by SM minority shareholders for 120,000 won per share. This is the same price as Lee Soo-man’s stake acquisition price. Financing for open purchase has already been completed.
Hive explained, “Lee Soo-man has formed a consensus on proceeding with the tender offer in order to share the management premium he will enjoy with minority shareholders.”
With the acquisition of SM, Hive is planning to create synergy in all business areas.As a result, the controversy over SM management rights triggered by the production reform plan excluding Lee Soo-man and the acquisition of Kakao’s stake seems to be settled by Hive’s sudden acquisition. The music industry is paying keen attention to the SM shareholders’ meeting scheduled for next month.Kakao joined hands with SM on the 7th to secure a paid-in capital increase of 9.05%, but Hive joined hands with Lee Soo-man to beat it.Hive will also launch a tender offer for shares held by SM’s small shareholders. Hive said, “We decided to acquire it to strengthen our competitiveness in the K-POP market and create synergy effects.”Earlier, SM Entertainment said, “We oppose all hostile M&As” to Hive’s rumor of acquiring SM.SM said in a statement earlier in the day that it opposes privatization by specific shareholders and forces, and will do its best to establish a sound and transparent governance structure and protect shareholder rights.
JULIE KIM
ASIA JOURNAL
