HYBE to acquire remaining SM shares of founder Lee Soo-man

The 3.64 percent stake will be handed over for 104.3 billion won, raising HYBE's percentage of the K-pop agency to 12.6 percent.

SM Entertainment founder Lee Soo-man during a conference held in central Seoul on Feb. 14, 2023 [YONHAP]

HYBE, the K-pop powerhouse, will acquire an additional 3.64 percent stake in SM Entertainment for 104.3 billion won ($78.2 million).

The shares are the remaining stake of SM Entertainment belonging to company founder and former chief producer Lee Soo-man. With the latest transaction, Lee will no longer hold any stake in the K-pop agency, home to boy band NCT and girl group aespa.

Lee sold a 14.8 percent stake in SM to HYBE during last year’s standoff between HYBE and Kakao over the control of the company.

HYBE will buy Lee’s 868,948 shares of SM for 120,000 won per share, far above the company’s share price of 78,200 won as of Thursday, as the SM founder exercised his put option granted by the acquirer during their previous transaction in February 2023.

The latest share acquisition, which is set to be completed by Mar. 7, will bring HYBE’s stake to 12.6 percent.

During the SM takeover battle last year, HYBE purchased Lee’s shares in SM to secure a controlling stake in the company for 422.8 billion won.

However, after Kakao emerged as the winner, HYBE offloaded some of its shares to push down its stake to the 8 percent level.

Kakao and Kakao Entertainment together held a combined 39.87 percent stake in SM — 20.76 percent and 19.11 percent each — to constitute the largest shareholders, according to SM Entertainment’s latest quarterly financial report filed in November.

The SM takeover, however, took a significant toll on Kakao as its chief investment officer, Bae Jae-hyun, has been taken into custody and is currently going through a trial on charges of alleged stock price manipulation during the takeover bid.

SM closed at 78,200 won on Thursday, down 1.64 percent from the previous trading day, on the main Kospi bourse.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]