SM explains why they resist hostile takeover by HYBE + says HYBE would kill competition Soompi
SM Entertainment released a video detailing their stance.
On February 20th, the agency uploaded a video titled “The reason why SM opposes the hostile takeover of HYBE”.
In the video, Jang Cheol Hyuk, CFO of SM Entertainment, begins by saying: “As soon as SM’s new vision, ‘SM 3.0’, was announced, the largest shareholder sold its stake and a hostile takeover attempt by a competitor began. It’s an attempt that ignores not only the fierce deliberations and efforts of SM’s 600 employees who dreamed of becoming the world’s leading entertainment company, but also SM’s values and pride it pursued with fans and artists. »
Below are the key points outlined by SM Entertainment in this video:
– HYBE has acquired more than 14% of Lee Soo Man’s shares and plans to acquire 40% of the agency’s shares without internal consultation. SM Entertainment believes this is a hostile takeover and that HYBE is attempting to take over the board of SM Entertainment through the back door. SM Entertainment believes this is an approach akin to SM’s “bad past under Lee Soo Man,” which the agency is now trying to shed to start afresh on a healthier footing.
– SM says HYBE CEO is lying and says SM will keep control of his agency.
– HYBE will apply for a loan of more than 1 trillion won (EUR 722 million) to acquire SM Entertainment as HYBE currently does not have the funds to acquire SM.
– SM is surprised that the decision to invest so much money from HYBE was taken without consulting HYBE’s board of directors, who nonetheless care about such an investment. SM therefore wonders why those responsible at HYBE were not even interviewed by Bang Si Hyuk before this takeover attempt with everyone’s money.
– HYBE should have undergone an audit to demonstrate its financial capacity to assume this role prior to attempting to repurchase shares from SM, but HYBE did so without external financial analysis.
– A competitor would become the “parent” of SM Entertainment. HYBE would have 100% management rights to artists from SM Entertainment.
– SM Entertainment artists’ comebacks would inevitably be pushed to periods not competing with HYBE artists’ releases.
– Each agency already exceeds the optimal number of album releases per year, so a merger would force HYBE to postpone SM artist comebacks to less favorable dates to prioritize HYBE artist comebacks.
– SM should give up its platforms and forcefully join Weverse. All the money generated by the content of SM artists would therefore enrich HYBE and thus generate an immense loss of resources for SM in favor of strengthening HYBE.
– Impossibility to develop “SM 3.0” led by HYBE, which wants to manage its agencies.
– The merger will benefit HYBE shareholders, who will increase their value with the entry of SM among them, but will decrease the value of the shares of SM, which will only be a subsidiary of HYBE.
– HYBE bought shares in the companies within SM managed by Lee Soo Man, which according to SM appears to mean that HYBE plans to provide benefits and opportunities to Lee Soo Man, as per the agreement signed between HYBE and Lee with premeditated mistakes So man.
– HYBE and SM artists together account for 70% of album revenue and 66% of total music industry revenue. If he buys SM, then the HYBE company will have a 70% monopoly on the major K-POP artists. This poses a threat to K-POP as a whole, as the lack of diversity would only increase and K-POP would disappear in favor of HYBE-only K-POP. This applies to all bands and artists. Indeed, HYBE would thus have immense power over the media and television to dictate their decisions, monopolizing more than half of the music market.
– SM + HYBE also accounts for 89% of performance-related sales (concerts, fan meetings, etc.), proving once again the crushing and unfair monopoly on other artists that this would represent.
– K-POP fans will be big losers in this case.
– SM uses real numbers to show that HYBE has doubled the price of its concert tickets since 2019.
– Supporting figures, the agency reveals that tickets for concerts by HYBE artists (particularly SEVENTEEN and TXT) have risen from 100,000 won ($80) per ticket to 198,000 won ($150) in 5 years.
– For their part, SM Entertainment artists increased from 110,000 won for SNSD and EXO in 2016 to 132,000 won in 2022.
– The most expensive concert at SM is that of aespa with tickets for 154,000 won (111 euros).
– SM believes that its artists’ concert tickets will therefore inevitably increase under HYBE, as was the case with SEVENTEEN, and that the fans will only suffer for the money that mainly goes to HYBE.
– HYBE acquired Lee Soo Man’s shares while planning other acquisitions, and HYBE should have been subject to Fair Trade Commission analysis, but HYBE pretended to conduct these two operations separately to avoid investigation by the Commission.
– If many shareholders sell to HYBE, SM Entertainment’s share price may plummet and cause great damage to SM, which will only reduce the agency’s opportunities.
– 85% of SM Entertainment employees oppose acquisition by HYBE and Lee Soo Man.
– SM specifies that its studies show that the takeovers of companies by others of the same size have always led to the destruction of the acquired company 100% of the time, which the agency fears in this takeover of HYBE.
– SM Entertainment asks shareholders not to sell their shares to HYBE, stating that the figures show that SM’s share price has already outperformed HYBE’s offer and that this will only increase in the coming months with the implementation of “SM 3.0 “ will rise.
– Finally, SM confirms that the agency is absolutely against this hostile takeover attempt and that they will fight to the end to prevent HYBE from taking over SM and imposing his law on him.
Watch the video below: