HYBE to buy 2 labels in the Americas after dropping SM bid

HYBE Co., the company behind global sensation BTS, plans to acquire at least two prominent labels in the Americas this year as it aims to become a major player in the global music industry, its head said on Wednesday, after giving up its takeover bid for K-pop pioneer SM Entertainment Co.

“We are considering the acquisition of a top-tier label in Latin America that shares a similar philosophy to ours and is interested in future innovation,” HYBE founder and Chairman Bang Si-hyuk said in a forum with senior South Korean journalists.

“At the same time, we are keeping an eye on one or two labels of hot producers in the US,” Bang said, mentioning HYBE’s goal to grow into a company that cannot be ignored by the US music industry.

HYBE has already taken over major US labels such as Ithaca Holdings, the company behind Justin Bieber and Ariana Grande, as well as QC Media Holdings Inc.

Bang said HYBE aims to maximize the impact of networks by connecting top-tier labels and management companies, adding that the South Korean firm plans to include other management companies with creators.

The remarks came three days after HYBE decided to pull out of the face-off with Kakao Corp. for control of SM, ending a month-long battle for the label behind girl group aespa with an estimated $1 billion price tag.

HYBE had planned to acquire SM through a purchase of a 14.8% stake from its founder and top shareholder Lee Soo-man and a tender offer to secure an additional 25% stake after Kakao agreed to buy a 9.05% stake.

But HYBE’s attempt failed as SM’s stock price rose above the tender offer price of 120,000 won ($91.4) per share. Kakao, the country’s mobile platform giant, then decided to launch a 1.25-trillion-won takeover bid.

RETURN TO ORIGINAL GLOBAL PUSH INSTEAD OF SM ACQUISITION

“We decided not to push ahead with the takeover as SM stock prices surged to exceed the proper level we initially thought, hurting HYBE’s shareholder value and shaking the market order,” Bang said. “The market overheated more than expected with the intensifying fight for the acquisition.”

SM shares hit a record high of 161,200 won after Kakao unveiled its own counter-tender offer plan.

HYBE had mulled the takeover of SM since 2019 and approached the company a few times, Bang said.

“We offered twice in 2019 but were rejected. We had a discussion again last year,” he said. “This time, we proceeded after Mr. Lee Soo-man contacted us,” he said.

Bang said, however, the move to buy SM faced internal backlash.

“Those opponents proposed that HYBE should use the money not for the acquisition of SM but for future innovations in the global market, saying HYBE is not a just K-pop company,” Bang said.

Reflecting such suggestions, HYBE is poised to focus on the acquisitions of prominent labels in other countries, Bang said.

“We decided to go global as we originally planned instead of the takeover (of SM),” he said.

HYBE should expand its presence in the world, Bang stressed.

“K-pop accounted for less than 2% of the global album and music sales,” he said. “As we have Samsung in the global semiconductor sector and Hyundai in the world’s automobile market, we need a global entertainment company.”

Samsung Electronics Co. is the world’s top memory chipmaker, while Hyundai Motor Co., along with its affiliate Kia Corp. is the world’s No. 3 carmaker.

Toward that end, HYBE is establishing a system of multi-labels through subsidiaries such as Big Hit Music of BTS, Source Music of girl group Le Sserafim and Belift Lab of boy band Enhypen.

HYBE’S STAKE IN SM

HYBE plans to internally discuss how to handle its 15.78% stake in SM, Bang said.

The company is expected to sell a part of the stake to Kakao, taking advantage of its tender offer, and become the second-largest shareholder, industry sources said.

HYBE and Kakao agreed to cooperate to boost their platform businesses.

“I am really satisfied with the agreement on the platform business,” Bang said.

Meanwhile, Bang said SM Founder Lee was disappointed in HYBE’s decision to withdraw its bid.

“Lee asked why we stopped there, even though we could win,” he said.

Write to Ji-un Ha and Hee-Kyung Kim at hazzys@hankyung.com
 
Jongwoo Cheon edited this article.