Battle heating up between HYBE and Kakao to acquire SM Entertainment, what to look at?
Published at : February 19, 2023
SM향한 카카오 vs 하이브의 배틀, 주목할 쟁점은?
The battle over SM Entertainment's ownership.
It began with activist fund Align Partners Capital Management raising concerns against the company's governance structure.
SM Entertainment then began to raise questions about the founder Lee Soo-man's role in the agency.
Lee teamed up with HYBE, the K-pop agency behind the global sensation BTS, after current SM executives joined forces with Internet giant Kakao.
What's behind this ownership battle?
How could the K-pop landscape change if HYBE DOES take over SM?
Or could Kakao take control?
For an in-depth analysis, we invite Professor Kim Minkyun, fromSogang University's Business School.
Professor Kim, welcome to the show.
And we also have Bernie Cho, President of DFSB Kollective joining live from Los Angeles, California.
Bernie, welcome, and thank you for your time.
Q1. It is no exaggeration to call Lee Soo-man a titan who not only built SM Entertainment but was also behind some of SM’s leading artists – H.O.T., Girls’ Generation and so on. But what made the agency veer away from Lee’s dominant influence? How did this fight over ownership start in the first place?
Before we get into details on the reason why HYBE has decided to acquire a 14.8 percent stake in its rival K-pop agency, let's dig into the deal between SM Entertainment and Kakao first.
Q2. So the mega deal between HYBE and SM Entertainment comes after SM and Kakao signed a separate deal under which Kakao acquired around a nine-percent stake of SM by buying newly issued shares and convertible bonds. But Lee Soo-man filed a suit to nullify that. What is this about?
Q3. It seems the court's ruling will be very important for both Kakao and HYBE. Experts also say the timing of the ruling is significant. Could you elaborate for us on the potential scenarios that could play out depending on the court's decision?
Q4. The word is that if HYBE does get a grip on the entertainment agency, it would be able to expand the boundaries of what its been doing up to now. What aspect of SM Entertainment would provide that opportunity for HYBE?
Q5. So HYBE, after striking a purchase agreement with Lee, offered to buy up to a 25% stake on the open market by March 1st.
If it succeeds, it will hold a nearly 40-percent stake in SM Entertainment. Pundits say the Fair Trade Commission could raise the issue of a monopoly being created due to HYBE’s acquisition of SM Entertainment. What is this about?
Q6. Apart from legal issues, once the acquisition is completed as planned, a K-pop behemoth will be born – some foreign media is even saying it would be as big as established music label giants Sony, Universal and Warner Music. How would such consolidation reshape the K-pop landscape?
Q7. On the other hand, why are platforms like Kakao and Naver interested in investing in and taking ownership of entertainment businesses?
Q8. If Kakao gets control of the agency, how would things look for SM Entertainment? Would SM Entertainment be able to maintain the uniqueness it has developed up to now?
Q9. Meanwhile, the battle over the ownership of SM Entertainment is benefiting minority shareholders of the agency, increasing the company’s value and raising the share price. How are market experts seeing the battle and what impact is it going to have on those companies’ stocks?
Q10. How are other major K-pop agencies – YG and JYP Entertainment, along with small and medium-sized agencies viewing this battle over SM's ownership?
Q11. On the first week of March, a regular shareholders meeting is set to take place. What should we look out for and how could it affect the battle?
Alright, unfortunately that's all the time we have for today's edition.
Thank you Bernie and Professor Kim for giving us a better understanding of the battle's focal points and how the feud over SM Entertainment's ownership will reshape the K-pop scene.
We appreciate it.
#SM #HYBE #Arirang_News
📣 Facebook : https://www.facebook.com/arirangtvnews
📣 Twitter : https://twitter.com/arirangtvnews
📣 Homepage : https://v2.arirang.com/
2023-02-16, 18:30 (KST)
The battle over SM Entertainment's ownership.
It began with activist fund Align Partners Capital Management raising concerns against the company's governance structure.
SM Entertainment then began to raise questions about the founder Lee Soo-man's role in the agency.
Lee teamed up with HYBE, the K-pop agency behind the global sensation BTS, after current SM executives joined forces with Internet giant Kakao.
What's behind this ownership battle?
How could the K-pop landscape change if HYBE DOES take over SM?
Or could Kakao take control?
For an in-depth analysis, we invite Professor Kim Minkyun, fromSogang University's Business School.
Professor Kim, welcome to the show.
And we also have Bernie Cho, President of DFSB Kollective joining live from Los Angeles, California.
Bernie, welcome, and thank you for your time.
Q1. It is no exaggeration to call Lee Soo-man a titan who not only built SM Entertainment but was also behind some of SM’s leading artists – H.O.T., Girls’ Generation and so on. But what made the agency veer away from Lee’s dominant influence? How did this fight over ownership start in the first place?
Before we get into details on the reason why HYBE has decided to acquire a 14.8 percent stake in its rival K-pop agency, let's dig into the deal between SM Entertainment and Kakao first.
Q2. So the mega deal between HYBE and SM Entertainment comes after SM and Kakao signed a separate deal under which Kakao acquired around a nine-percent stake of SM by buying newly issued shares and convertible bonds. But Lee Soo-man filed a suit to nullify that. What is this about?
Q3. It seems the court's ruling will be very important for both Kakao and HYBE. Experts also say the timing of the ruling is significant. Could you elaborate for us on the potential scenarios that could play out depending on the court's decision?
Q4. The word is that if HYBE does get a grip on the entertainment agency, it would be able to expand the boundaries of what its been doing up to now. What aspect of SM Entertainment would provide that opportunity for HYBE?
Q5. So HYBE, after striking a purchase agreement with Lee, offered to buy up to a 25% stake on the open market by March 1st.
If it succeeds, it will hold a nearly 40-percent stake in SM Entertainment. Pundits say the Fair Trade Commission could raise the issue of a monopoly being created due to HYBE’s acquisition of SM Entertainment. What is this about?
Q6. Apart from legal issues, once the acquisition is completed as planned, a K-pop behemoth will be born – some foreign media is even saying it would be as big as established music label giants Sony, Universal and Warner Music. How would such consolidation reshape the K-pop landscape?
Q7. On the other hand, why are platforms like Kakao and Naver interested in investing in and taking ownership of entertainment businesses?
Q8. If Kakao gets control of the agency, how would things look for SM Entertainment? Would SM Entertainment be able to maintain the uniqueness it has developed up to now?
Q9. Meanwhile, the battle over the ownership of SM Entertainment is benefiting minority shareholders of the agency, increasing the company’s value and raising the share price. How are market experts seeing the battle and what impact is it going to have on those companies’ stocks?
Q10. How are other major K-pop agencies – YG and JYP Entertainment, along with small and medium-sized agencies viewing this battle over SM's ownership?
Q11. On the first week of March, a regular shareholders meeting is set to take place. What should we look out for and how could it affect the battle?
Alright, unfortunately that's all the time we have for today's edition.
Thank you Bernie and Professor Kim for giving us a better understanding of the battle's focal points and how the feud over SM Entertainment's ownership will reshape the K-pop scene.
We appreciate it.
#SM #HYBE #Arirang_News
📣 Facebook : https://www.facebook.com/arirangtvnews
📣 Twitter : https://twitter.com/arirangtvnews
📣 Homepage : https://v2.arirang.com/
2023-02-16, 18:30 (KST)
Arirang NewsBTSEnglish