HYBE and SM Entertainment shares soar after deal introduced

Seoul/Hong Kong

HYBE, the administration company behind famous person boy band BTS, will turn into the largest shareholder of its Ok-pop rival, SM Entertainment.

The transfer strengthens HYBE’s dominance in South Korea’s music business, the place it’s already the largest participant, even because it seeks to increase overseas.

The South Korean leisure giants introduced the deal Friday, with HYBE set to select up a 14.8% stake in SM Entertainment for 422.8 billion Korean received ($334.5 million).

SM was based by legendary music producer Lee Soo-man, who’s broadly referred to in South Korea as “the godfather of K-pop.” The firm is thought for representing hit artists, resembling NCT 127, EXO, BoA and Girls’ Generation.

News that the 2 firms had been becoming a member of forces fired up traders. SM Entertainment’s shares soared 16% in Seoul on Friday. HYBE’s inventory initially rose 3%, earlier than paring features to shut down 1.5%.

Outside of BTS, HYBE additionally represents outstanding bands resembling NewJeans, Tomorrow x Together and Seventeen.

But its marquee act is at the moment on hiatus. Members of BTS began particular person obligatory army service in South Korea late final 12 months, and the group as an entire is predicted to reconvene round 2025.

Now, HYBE is popping its consideration elsewhere.

“This acquisition represents a major step by HYBE to integrate the global expertise of both companies to become a game changer in the global music industry,” the corporate mentioned in an announcement.

HYBE has been taking steps to increase its world attain. On Thursday, it introduced one other main deal within the United States, saying it will purchase the proprietor of Quality Control, a hip-hop label that represents well-liked artists together with Migos and Lil Yachty.

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That deal will assist HYBE construct a stronger presence within the US music market, in accordance with Sunhwa Lee, an web and leisure analyst at KB Securities. In a report Thursday, she famous that the corporate’s broader ambitions had been “to go beyond the boundaries of K-pop and develop new global artists across various genres.”

“This partnership is a vital part of our growth plan to innovate the entertainment industry through a diversified portfolio,” HYBE Chairman Bang Si-Hyuk mentioned in an announcement. “We will work together to continue adding depth of hip-hop to the global music industry.”

Bernie Cho, a Seoul-based music business govt, mentioned the 2 offers introduced had been in contrast to something he’d seen.

This “may be the biggest one-two power punch I’ve ever seen or heard [of] in the history of the K-pop industry,” mentioned Cho, president of DFSB Kollective, a music artist and label companies company.

He mentioned the offers had the potential to place HYBE in the identical league because the “big three” main document labels: Sony

(SNE), Universal and Warner Music.

“HYBE, in their post-BTS stage, have really stunned and surprised fans and financial analysts by really smart, really savvy huge deals,” he added.

In 2019, BTS accounted for as a lot as 90% of income at its administration firm, then referred to as Big Hit Entertainment. That left analysts involved that the agency, later renamed to HYBE, was overreliant on the band.

Since then, nevertheless, HYBE has expanded its roster.

In latest years, its slate has grown to incorporate different world celebrities, together with Justin Bieber, Ariana Grande and Demi Lovato, who’re represented by a crew underneath HYBE’s US subsidiary.

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The South Korean agency has additionally has a tie-up with Big Machine Label Group, an affiliate that oversees a number of the high artists in nation music, resembling Sheryl Crowe, Rascal Flatts and Tim McGraw.

“HYBE is no longer a K-pop juggernaut. The K has now become silent,” mentioned Cho. “They’ve become a pop music juggernaut.”