HYBE, the agency behind BTS, TXT, and NewJeans, has sold its entire 9.66% stake in rival SM Entertainment to China’s Tencent Music Entertainment (TME) for 243.35 billion KRW ($177 million). The deal, set to close on May 30, marks HYBE’s full exit from SM after a contentious 2023 takeover battle. It now positions Tencent as SM’s second-largest shareholder behind Kakao (42%).
On Tuesday (May 27), HYBE revealed its intention to sell the remaining stake in SM Entertainment via a regulatory filing.
The entertainment conglomerate has decided to sell its entire stake in SM Entertainment, consisting of 2,212,237 shares, to Tencent Music Entertainment for approximately 243.3 billion won (USD 177 million). This move comes after a board meeting and will be executed through a block trade after market hours on May 30. Each SM share will be sold at 110,000 won, which is a 15.32% discount from the previous day’s closing price of 129,900 won.
HYBE initially acquired its shares in SM Entertainment in 2023 during a takeover battle, but has been reducing its stake since then.
HYBE’s attempt to acquire SM Entertainment began in early 2023 with the purchase of a 14.8% stake from SM’s founder, Lee Soo Man. However, Kakao ultimately emerged victorious in the takeover bid. Following this, HYBE sold roughly half of its stake to Kakao via a public offering.
Subsequently, HYBE sold its remaining stake in two phases: first, a block deal in May last year, and now, the sale of its entire remaining stake to Tencent.
Regarding the sale, HYBE stated, “This is part of our non-core asset disposal, and the secured funds will be utilized to secure future growth engines.”
SM Entertainment has already partnered with Tencent Music to bring its IP into the Chinese market more aggressively, and the two companies have celebrated SM’s 30th anniversary with events in cities like Beijing and Shenzhen.
Now with the Thaad ban about to lift, SM Entertainment’s China-focused bands like WayV could benefit from this partnership. With the proceeds from the sales, HYBE may push for Latin American expansion, next-gen platforms, acquisitions, or tech ventures.
Meanwhile, SM Entertainment is home to NCT, EXO, aespa, Super Junior, RIIZE, nævis, Hearts2Hearts, and more.