HYBE Turns Focus To U.S. Market After Withdrawing Bid For SM Entertainment

Korea’s HYBE, which manages K-pop band BTS, says it’s planning a series of acquisitions and investments in the U.S. entertainment market this year, after withdrawing from a heated battle with internet giant Kakao to take control of rival agency SM Entertainment. 

HYBE founder and chairman Bang Si-hyuk said the company will announce a “substantial number of acquisitions and investments within this year as part of our efforts to widen our presence in the U.S.” 

Bang has also recently said that the K-pop industry is losing the growth momentum that it enjoyed during the pandemic and that major players would need to scale up and diversify in order to survive. Some of that slowdown is attributed to BTS currently being on a break as a group. “Without BTS, the market drastically shrinks in size,” said Bang. 

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HYBE already owns Scooter Braun’s Ithaca Holdings, which manages Justin Bieber and Ariana Grande, through its HYBE America subsidiary following a $1BN merger announced in April 2021.  

HYBE announced on March 12 that it was pulling out of its takeover bid for SM Entertainment after “observing that the market has been showing signs of overheating due to competition with both Kakao and Kakao Entertainment”, which it feared would have a negative impact on shareholder value. 

A few days previously, Kakao had made an offer close to $1BN to acquire up to 35% of SM Entertainment and prevent HYBE from taking control. 

HYBE, which holds a 14.8% stake in SM Entertainment after acquiring shares held by former chief producer Lee Soo Man, now says it has held talks with SM and Kakao and “agreed to cooperate on matters related to their platforms”. 

SM Entertainment manages major K-pop acts including Super M, BoA, Girls’ Generation, Super Junior and NCT Dream.

Kakao is now likely to become the company’s biggest shareholder after continuing with plans to buy its shares through March 26. 

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