HYBE CEO Park Ji-won has published an open letter discussing his company’s completed acquisition of the majority stake in its competitor, SM Entertainment.
The letter was posted on HYBE’s official social media accounts on Tuesday in Korean, Japanese and English.
HYBE is now the single largest shareholder in SM. They have also offered to purchase another 25% stake in the agency from minority investors.
Park’s letter claims that HYBE and SM will combine their “creative capabilities and content-oriented culture” as HYBE’s mission of “We believe in music” aligns with SM’s existing 3.0 growth strategy, which Park wants to maintain.
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He reiterated that SM artists will have “complete autonomy” as HYBE respects SM’s “legacy and creative values,” adding that HYBE will lend its “business models and networking capacities” to aid SM in its growth. Both companies also run fan community platforms — HYBE’s Weverse and SM’s Bubble — which they aim to expand globally.
SM has not responded to the open letter, but they did post a video on their YouTube channel expressing the advantages of their newfound partnership with tech company Kakao.
Kakao has a 9.05% stake in SM, which was acquired around the time of HYBE’s own announcement.
SM founder Lee Soo-man’s legal counsel has called Kakao’s actions an “act of illegality” and has filed an injunction to terminate the deal. Meanwhile, HYBE’s CEO has expressed ambivalence regarding the SM and Kakao deal.
Based on the assumption that Kakao does not have interest in business management, we are open to business proposals that benefit SM Entertainment, but as Kakao has yet to inform the specifics into its partnership or proposal, understand that it’s too early for me to mention about it.
HYBE’s acquisition has been met with division and fury among SM’s top leaders and employees.
CFO Jang Cheol-hyuk and CEO Chris Lee, the nephew of SM’s founder, have released a series of videos on SM’s official YouTube channel, as well as on their personal accounts.
On Monday, Jang called the acquisition a “hostile takeover” and warned against the impact of a monopoly on the K-pop industry, which HYBE has refuted. Last week, Chris Lee accused his uncle of years’ worth of offshore tax evasion and the imposition of environmental sustainability motifs into SM music projects to support his real estate business interests and plans for casinos in which visitors can smoke marijuana. The environmental emphasis clashed with much of SM’s current vision centered around the metaverse, which Lee alleges caused a delay in Aespa’s album comeback and upset the members to the point of tears.