giant of K-pop HYBE sold a portion of its stake to rival South Korean music group SM Entertainment worth $50 million, or about 3% of the company, according to a filing made public on Tuesday (May 28).
Although it sold about 755,500 shares worth 68.4 billion Korean won, HYBE still owns about 2.2 million shares that make up a 9.4% stake in SM Entertainment, the company behind acts such as aespa and NCT 127 .
Home of music supergroup BTS, HYBE's actions related to SM have been closely scrutinized since it acquired nearly 16% of SM's shares in a failed takeover bid last year.
In March this year, HYBE bought an additional 868,948 shares of SM for about 104.3 billion won ($78 million). This was the last installment of the SM founder's shares Lee Shu-man had committed to sell to HYBE after acquiring a majority stake of 15.8% from it in February 2023, according to a regulatory filing on February 28.
HYBE's purchase of Lee Soo-man's shares briefly created a power struggle in South Korea's K-pop industry. But in the end, Kakao Corp.'s subsidiary Kakao Entertainment acquired nearly 40% of SM shares to control the company, a deal that received formal approval from the Korea Fair Trade Commission earlier this month.
Since losing out to Kakao, HYBE's stock has fallen more than 28% in the past 12 months. For the first quarter of this year, HYBE posted its lowest total revenue in two years — revenue of 360.9 billion won ($271.5 million), down 12.1% year-on-year and the lowest since 285 billion won ($214.4 million) in the first quarter of 2022. Operating profit plummeted to 14.4 billion won ($10.8 million), down 72.6% from the year-ago period.
