There’s loads of change and consolidation taking place within the Okay-Pop business proper now.

On Wednesday (February 22), HYBE, the corporate behind acts like BTS and New Denims, accomplished a deal to accumulate a 14.8% stake in its rival SM Leisure, which is behind stars like NCT, EXO and Aespa.

The deal, price 422.8 billion South Korean gained (approx. $335 million), signifies that HYBE is formally the biggest single shareholder in SM Leisure, having acquired these shares from the corporate’s founder Lee Soo Man.

In an open letter confirming the completion of the deal to purchase the 14.8% stake, HYBE CEO Jiwon Park outlined what he believes are the similarities between HYBE and SM and famous that, “that is an period of change for each firms”.

He additionally shared the corporate’s ambitions for Okay-Pop and particularly for HYBE and SM Leisure’s positioning within the world music enterprise, writing that the “world music business is undoubtedly paying shut consideration to Okay-pop and its worldwide success”.

He added: “It nonetheless has a lot chance to achieve a better fanbase with extra content material and experiences to supply. Okay-pop flourished in an atmosphere the place we may problem ourselves. We must always preserve the bottom in order that we will stand shoulder-to-shoulder with the world’s main file labels.”

His letter follows the publication of the corporate’s newest monetary outcomes, wherein it revealed that its annual revenues grew 41.6% YoY to 1.77 trillion South Korea Gained (USD $1.37 billion) in 2022.

HYBE has beforehand revealed in a submitting that it intends to up its 14.8% stake in SM to round 40% of the corporate, by buying one other 25.2% of SM Leisure’s shares for a complete of 1.14 trillion South Korea Gained (USD $900 million USD) from minority shareholders.

It has launched a young supply to take action.

SM Leisure’s present administration have come out in opposition of the plan, nonetheless, with HYBE’s acquisition of Lee Soo Man’s shares arriving amidst pressure between SM’s management and its founder.

Information of the deal closing comes a number of days after SM Leisure CFO Jang Cheol Hyuk revealed a video on YouTube wherein he slammed HYBE’s takeover bid, arguing that it will result in the latter firm’s monopolization of the Okay-Pop business.

He defined intimately why SM Leisure’s administration opposes a takeover by HYBE – noting specifically that he believes HYBE artists will likely be prioritized over SM Leisure artists if the companies have been to be mixed.

“Integrating HYBE and SM’s inventive capabilities and content-oriented tradition will showcase a historic innovation within the world scene”.

Jiwon Park

Elsewhere within the new letter from HYBE CEO Jiwon Park, he argues that “integrating HYBE and SM’s inventive capabilities and content-oriented tradition will showcase a historic innovation within the world scene”.He additionally addressed issues, “that followers, artists, staff, and shareholders of SM have, attributable to rumors and speculations across the firm”.

He added: “I wish to categorical my remorse to SM artists specifically, who might have been troubled by the flip of occasions. We respect SM’s artists as a lot as we do our artists at HYBE. Leveraging the experience we’ve gathered, we’ll do our greatest to create a brighter future for all artists beneath SM.”

In the meantime, SM Leisure, alongside an announcement for its 2023 Annual Common Assembly, doubled down on its opposition to what it calls  HYBE’s “hostile M&A”.

The corporate additionally introduced in the present day that it goals to generate 1.2 trillion South Korea Gained (approx $923m at present trade charges) in income and 430 billion South Korea Gained in working revenue by 2025, with a goal inventory worth of 360,000 South Korea Gained, with the extra purpose of tripling its company worth over the subsequent three years by the implementation of its “SM 3.0” technique.

SM Leisure lately reported an 18.2% year-over-year rise in income in This autumn 2022 to 256.4 billion South Korea Gained  (USD $197.7 million).

You possibly can learn  HYBE CEO Jiwon Park’s letter in full beneath.

Pricey SM Leisure followers, staff, artists, and shareholders, I’m Jiwon Park, CEO at HYBE.

I’m happy to share that in the present day, February 22, 2023, HYBE accomplished the acquisition of a 14.8% stake in SM Leisure (“SM”) held by SM’s founder and former Chief Producer Lee Soo-man, and have become the only largest shareholder in SM.

As promised on February 10, HYBE resolved the governance difficulty between former Chief Producer Lee’s and SM, in the course of the course of the share acquisition.

SM will likely be transferring to turn into an organization with a clear governance construction that prioritizes shareholder worth. I wish to share extra particulars on the similarity between HYBE and SM’s company philosophy, and the synergy we will collaborate to create within the coming future.

Collaborative Innovation primarily based on Mutual Company Philosophy

As leaders and pioneers of the Okay-pop business, each HYBE and SM have been triumphing on the worldwide stage. HYBE’s imaginative and prescient to turn into a number one world leisure way of life platform firm beneath its mission “we imagine in music” is carefully interconnected with the purpose of SM 3.0 to ‘leap ahead as a fan- and shareholder-centered world leisure firm’. Moreover, integrating HYBE and SM’s inventive capabilities and content-oriented tradition will showcase a historic innovation within the world scene.

Permitting Full Autonomy of Inventive Work primarily based on Multi-Label System

HYBE has been efficiently working its multi-label system by giving autonomy to respective labels.

Our key issue behind the success is to ensure full autonomy over the creator’s work with ardour. HYBE does respect SM’s legacy and inventive values. We are going to share our enterprise mannequin and networking capacities with SM to assist its distinct, inventive work lead the world.

Leaping Ahead as a Recreation Changer on the World Stage

Leveraging our experience and world community, HYBE will actively assist SM artists’ endeavors in making a presence within the world music business. Each firms will work collectively in direction of establishing the worldwide floor the place our artists can introduce their music. We will share our experiences which have in the end led us to our main place within the world Okay-pop scene together with the US, South America, and India. HYBE can even be capable of profit from SM’s wealth of expertise from their artists’ success in China, Japan, and Southeast Asia. With our collaborative effort, we will turn into essentially the most progressive sport changer within the world music business.

Two main fandom platforms, HYBE’s Weverse and SM’s Bubble, will increase past Korea and compete within the world area. We can even create new alternatives leveraging the 2 firms’ capabilities in answer enterprise pipelines, from live performance, distribution and authentic story IP to enterprise growth. The worldwide music business is undoubtedly paying shut consideration to Okay-pop and its worldwide success. But it nonetheless has a lot chance to achieve a better fanbase with extra content material and experiences to supply. Okay-pop flourished in an atmosphere the place we may problem ourselves.

We must always preserve the bottom in order that we will stand shoulder-to-shoulder with the world’s main file labels. Final however not least, I’m conscious of the issues that followers, artists, staff, and shareholders of SM have, attributable to rumors and speculations across the firm. HYBE totally respects the path specified by SM 3.0 progress technique, in addition to the worth and imaginative and prescient SM’s staff and artists have created. I wish to categorical my remorse to SM artists specifically, who might have been troubled by the flip of occasions.

We respect SM’s artists as a lot as we do our artists at HYBE. Leveraging the experience we’ve gathered, we’ll do our greatest to create a brighter future for all artists beneath SM. That is an period of change for each firms. We want any short-term enterprise selections or prejudgement by some leaders would not trigger confusion and uncertainty.

I hope the administration can come to a clever and cheap conclusion to make sure that our shared visions and enterprise instructions are heading in the right direction. As said in our DNA, ‘Win Collectively, HYBE is stuffed with successful spirits on succeeding collectively. We hope to take pleasure in extra success with followers, staff, artists, and shareholders of SM within the coming future. If we work aspect by aspect, we will proceed to steer Okay-pop’s world phenomenon.

Thanks. Sincerely, Jiwon Park HYBEMusic Enterprise Worldwide