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Music and entertainment

HYBE’s $400 mn rights offering for Ithaca merger to open June 1-2

Raised funds to diversify company's revenue streams beyond BTS

By May 26, 2021 (Gmt+09:00)

Butter, the latest global hit by BTS, is a YouTube sensation
Butter, the latest global hit by BTS, is a YouTube sensation



HYBE Co., the music and entertainment agency behind BTS, on Jun 1-2 will open the subscription for its rights issue shares worth 445.5 billion won ($400 million).

HYBE will be issuing 2,227,848 new shares, about 6.2% of more than 35.6 million shares currently outstanding in the market. The new shares have an expected issue price of 200,000 won ($179.04) a share.

HYBE said it will confirm the unit price of the new shares on May 27, reflecting the latest trend in its stock price. Its shares traded at 259,000 won ($231.72) on May 26, up 6.6% from Apr. 2 when it announced the rights offering and 29.5% higher than the expected issue price.

As none of the newly issued 2,227,848 shares are locked up, they can be sold in the stock market from their June 22 day of listing.

HYBE Chairman Bang Si-hyuk will also be purchasing all 774,057 shares that he has been assigned as the largest shareholder. Currently holding a 34.7% stake in the company, he will be injecting 154.8 billion won ($137 million) to fully exercise his subscription rights to the new shares.

Bang is known to have raised around 65 billion won ($57.6 million) in 2018 by selling 7.82% of the company’s shares.

HYBE TO PROCEED WITH ITHACA MERGER

HYBE will use the $400 million to be raised from the rights issue to proceed with the acquisition of Ithaca Holdings, a US-based integrated media company that manages global artists including Justin Bieber and Ariana Grande.

The acquisition price is $1.05 billion according to the company’s announcement.  

Analysts say that HYBE’s Ithaca acquisition will clear the market’s doubts on its revenue model, which currently has a heavy reliance on BTS. The post-merger HYBE will house three of the world’s top 10 artists based on the International Federation of the Phonographic Industry (IFPI) Global Artist Chart 2020.

BTS last year topped the IFPI chart, which annually ranks the world’s top 10 bestselling artists, and Ithaca’s Ariana Grande and Justin Bieber ranked eighth and tenth, respectively.

Financial analysts have said that HYBE’s fan community platform Weverse will be the biggest beneficiary of the merger. Held 51% by HYBE and 49% by Naver through a share swap partnership, the platform specializes in hosting multimedia content and artist-to-fan communications for artists of HYBE, such as BTS, as well as of competitor labels.

“HYBE’s quarterly operating profit will surpass 100 billion won ($89.4 million) considering that the Weverse platform now has more than 10 million subscribers worldwide and that Ithaca’s global artists will potentially be having online concerts on the platform,” said Hana Financial Investment Analyst Lee Ki-hoon.

HYBE’s operating profit in the first quarter of this year stood at 22.7 billion won ($20.3 million).

Write to Jin-seong Kim at jskim1028@hankyung.com

Daniel Cho edited this article.

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