K-pop showdown amplifies shareholder voices

SM Entertainment Co

22/02/2023 02:46

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Robyn Mak
       HONG KONG, Feb 22 (Reuters Breakingviews) - A hostile
takeover of South Korean music label SM by rival Hybe, which
manages global boy-band sensation BTS, is heading to a ballot.
The fierce saga exposes corporate governance woes that plague
Asia, but also some unlikely progress. Whichever side prevails,
investors win.     
    Full view will be published shortly.
    Follow @mak_robyn on Twitter 
    CONTEXT NEWS
    South Korean music agency Hybe said on Feb. 10 that it plans
to buy up to a 39.8% stake in rival SM Entertainment, including
a 14.8% holding from Lee Soo-man, the company’s founder and
largest shareholder, and 25% through a tender offer.
    "We oppose all aggressive outside mergers and acquisitions,
including Hybe," SM said in a statement, according to Reuters.
Lee has been in dispute with SM's current management over issues
involving the company's business dealings with his private firm.
    As part of the deal, Hybe, best known for managing the hit
boy band BTS, has agreed to buy most of Lee's 18.5% stake for
423 billion won ($330 million) and is offering 120,000 won per
share in the tender offer, a 22% premium to SM's closing price
on Feb. 9. If successful, it would be the largest hostile
takeover in South Korea, according to Dealogic data.
    Separately, internet conglomerate Kakao said on Feb. 7 it
would acquire a 9.05% stake in SM via 112 billion won of new
shares and 105 billion won of convertible bonds. Lee has tried
to block the deal in court, saying the issuance of new shares to
Kakao is "illegal" and designed to weaken his position as the
largest shareholder.
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Graphic: K-pop charts    https://tmsnrt.rs/3xF3leh
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 (Editing by Jeffrey Goldfarb and Katrina Hamlin)
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