The competition for supremacy in the Korean pop (K-Pop) industry has resulted in an ongoing drama. After a heated takeover battle between Hybe Corp., a supporter of popular K-Pop group BTS, and tech firm Kakao over control of SM Entertainment, Korea’s financial regulators are investigating the deal-making that eventually led to Kakao’s victory.
On Tuesday, the country’s Financial Supervisory Service conducted a raid on the offices of SM Entertainment, with investigators seeking evidence of stock price manipulation between February and March, during the time when the two sides were competing.
The battle for corporate dominance in K-Pop has led to drama and intrigue in recent months. After the takeover battle between Hybe Corp. and Kakao for control of SM Entertainment, Korean financial regulators are now investigating the deal-making that led to Kakao’s eventual victory. The Financial Supervisory Service raided SM Entertainment’s offices earlier this week to look for evidence of stock price manipulation between February and March of this year.
Hybe had bought a 14.8% stake in SM Entertainment from its founder, Lee Soo-man, but faced opposition from SM Entertainment’s management who sought support from Kakao. SM Entertainment announced plans to issue stock and convertible shares to Kakao, which was blocked by a court injunction. In response, Kakao, bolstered by funds from Saudi Arabia, made a higher-priced offer for 40% of SM Entertainment’s stock, which proved to be the decisive move in the takeover battle.
The ongoing competition for control of SM Entertainment between Hybe Corp. and Kakao has attracted attention, but now signs of a new normal are emerging. On Monday, Weverse, Hybe’s fandom platform, announced that 12 solo and group artists from SM Entertainment would join the platform and establish their own official communities by September 2023.
This move is part of a settlement agreed by SM Entertainment, Kakao, and Hybe, when Hybe accepted Kakao’s higher-value stock offer. Weverse covers fan chats, multimedia content, and a commerce platform where fans can purchase albums and official merchandise. According to Hybe, Weverse is now available in 245 countries and regions and has around 65 million subscribers.
According to reports from Korean financial media, Hybe’s shares have experienced a substantial increase of 37% over the past month, currently valued at KRW251,000 each. The surge in stock prices coincides with a truce that has led to increased interest from institutional and overseas investors, who have reportedly been net buyers of the company’s shares.