HYBE has become the single largest shareholder in SM by completing the acquisition of 14.8 percent of stoke on Wednesday, February 22. The firm released an open letter to the fans, artists, employees, and shareholders of SM Entertainment, sharing the acquisition details.
In the open letter, HYBE CEO Jiwon Park said the company resolved the governance issue between SM and former Chief Producer Lee Soo Man. SM will become a company with a transparent governance structure that prioritizes shareholder values.
Park shared more details about the similarities between both companies' corporate philosophies. He also shared the synergy they can collaborate to create in the upcoming future.
HYBE bought 3,523,420 common stokes of SM Entertainment's largest shareholder Lee Soo Man for 422.8 billion won ($334 million) on February 9 and became the largest shareholder in SM. It is planning to share Dream Maker Entertainment and SM Brand Marketing Co.
Here is the Open Letter by HYBE:
Dear SM Entertainment fans, employees, artists, and shareholders, I am Jiwon Park, CEO at HYBE.
I am pleased to share that today, February 22, 2023, HYBE completed the acquisition of a 14.8% stake in SM Entertainment ("SM") held by SM's founder and former Chief Producer Lee Soo-man, and became the single largest shareholder in SM.
As promised on February 10, HYBE resolved the governance issue between former Chief Producer Lee's and SM, during the course of the share acquisition. SM will be moving to become a company with a transparent governance structure that prioritizes shareholder value.
I would like to share more details on the similarity between HYBE and SM's corporate philosophy, and the synergy we can collaborate to create in the coming future.
Collaborative Innovation based on Mutual Corporate Philosophy As leaders and pioneers of the K-pop industry, both HYBE and SM have been triumphing on the global stage. HYBE's vision to become a leading global entertainment lifestyle platform company under its mission "we believe in music" is closely interconnected with the goal of SM 3.0 to 'leap forward as a fan- and shareholder-centered global entertainment company.' Additionally, integrating HYBE and SM's creative capabilities and content-oriented culture will showcase a historic innovation in the global scene.
Allowing Complete Autonomy of Creative Work based on Multi-Label System
HYBE has been successfully operating its multi-label system by giving autonomy to respective labels. Our key factor behind the success is to guarantee complete autonomy over the creator's work with passion. HYBE does respect SM's legacy and creative values. We will share our business model and networking capacities with SM to help its distinct, creative work lead the world.
Leaping Forward as a Game Changer on the Global Stage Leveraging our expertise and global network, HYBE will actively support SM artists' endeavors in making a presence in the global music industry. Both companies will work together towards establishing the global ground where our artists can introduce their music.
We can share our experiences that have ultimately led us to our leading position in the global K-pop scene including the United States, South America, and India. HYBE will also be able to benefit from SM's wealth of experience from their artists' success in China, Japan, and Southeast Asia. With our collaborative effort, we can become the most innovative game changer in the global music industry.
Two leading fandom platforms, HYBE's Weverse and SM's Bubble, will expand beyond Korea and compete in the global arena. We will also create new opportunities leveraging the two companies' capabilities in solution business pipelines, from concert, distribution and original story IP to business development.
The global music industry is undoubtedly paying close attention to K-pop and its international success. Yet it still has so much possibility to reach a greater fanbase with more content and experiences to offer. K-pop flourished in an environment where we could challenge ourselves. We should conserve the ground so that we can stand shoulder-to-shoulder with the world's major record labels.
Last but not least, I am aware of the concerns that fans, artists, employees, and shareholders of SM have, due to rumors and speculations around the company. HYBE fully respects the direction laid out in SM 3.0 growth strategy, as well as the value and vision SM's employees and artists have created.
I would like to express my regret to SM artists in particular, who may have been troubled by the turn of events. We respect SM's artists as much as we do our artists at HYBE. Leveraging the expertise we have accumulated, we will do our best to create a brighter future for all artists under SM.
This is an era of change for both companies. We wish any short-term business decisions or prejudgement by some leaders would no longer cause confusion and uncertainty. I hope the management can come to a wise and reasonable conclusion to ensure that our shared visions and business directions are on the right track.
As stated in our DNA, 'Win Together,' HYBE is full of winning spirits on succeeding together. We hope to enjoy more success with fans, employees, artists, and shareholders of SM in the coming future. If we work side by side, we can continue to lead K-pop's global phenomenon.
Sincerely, Jiwon Park
K-pop bands BTS, Seventeen, Tomorrow X Together (TXT), ENHYPEN and NewJeans. The group's under SM Entertainment are EXO, NCT, Aespa, Red Velvet, Girls' Generation, Super Junior and TVXQ.