On January 30, a post went viral on the popular Korean online community TheQoo after pointing out how Lee Soo Man, the founder and former chief producer of SM Entertainment (hereby SME), ultimately turned out to be the only winner in the bidding war between HYBE and Kakao to acquire his label.
Lee Soo Man | SM Entertainment
In the early months of 2023, the K-Pop industry was abuzz with the fight between the two big labels, HYBE and Kakao, to gain majority shareholder status in SME. Reportedly, HYBE acquired around 14.8% of the shares of the company from founder Lee Soo Man in February and purchased an additional 0.98% in March, adding up to a total 15.78% stake in the company. At the same time, Kakao announced its plans to become the largest shareholder in SME by purchasing up to 35% of the shares from the open market.
| Kakao Corp | SM Entertainment
In the end, Kakao ended up getting the upper hand, and HYBE decided to drop its pursuit of SME acquisition. The former purchased the shares at the price of ₩150,000 KRW (about $113 USD) a share, whereas the latter acquired them at ₩120,000 KRW (about $90.30 USD) a share. So, Kakao spent around ₩1.20 trillion KRW (about $903 million USD) to acquire SME, whereas HYBE also invested around ₩400 billion KRW (about $301 million USD) on it.
| HYBE
HYBE intended to dispose of all its SME shares but has managed to sell them only partially to Kakao at ₩150,000 KRW (about $113 USD) a share. So, they still hold a significant stake in the company. On the other hand, after Kakao became the majority shareholder, the conglomerate immediately faced charges of price manipulation and several scandals involving SME’s management. Further, SM Entertainment’s stock prices, which used to peak at ₩160,000 KRW (about $120 USD), have reportedly fallen below ₩78,000 KRW (about $58.70 USD).
| Google Finance
Consequently, the heated battle between the two companies to acquire SME has proven nothing but unfavorable to them both in terms of finance. On the other hand, Lee Soo Man, who managed to sell his shares to HYBE at a much higher rate than the current prices, has been deemed the real winner in this deal by many netizens.
| Naver “Soo Min hyung turned out to be the real winner.” “They should have just let HYBE acquire them. Kakao went out of their way for the acquisition, but look what happened. Whose fault is it?” “Lee Soo Man sold them at a good price and took off, LOL.” “There are no money-making groups in SM currently. Back in the day, they had good lineups like Super Junior, TVXQ, Girls’ Generation, and SHINee, but not anymore.”
