South Korean entertainment powerhouse HYBE has expanded its influence in the competitive K-pop scene by acquiring an additional stake in rival company SM Entertainment. The regulatory filing from HYBE reveals the purchase of 869,948 shares from SM’s founder, Lee Soo Man, at a transaction value of 104.3 billion South Korean won (approximately $78 million). This strategic move solidifies the label’s position in the K-Pop industry, known for housing popular acts like Aespa and NCT.

“With this acquisition, HYBE aims to strengthen its ties with SM Entertainment, a pivotal player in the vibrant K-Pop ecosystem,” stated a representative from the company. The deal, equating to a 3.64% stake in SM Entertainment, positions HYBE to own a commanding 12.6% of the company after the expected completion on March 7. This development unfolds a year after a high-stakes corporate tussle for control between HYBE and Kakao Corp, illustrating HYBE’s persistent commitment to its strategic partnership with SM Entertainment.

News outlet Korea JoongAng Daily reports that the entertainment company’s current investment follows the stock purchase rights outlined in a transaction from February 2023. “All successful negotiations are rooted in fulfilling contractual obligations. Lee Soo Man recently notified us of his intention to exercise his [put] options, and we are simply fulfilling our end of the contract,” commented HYBE to news outlets, emphasizing their adherence to the terms outlined in the transaction where the company first secured a 14.8% stake in SM Entertainment for approximately $335 million.

The sale marks Lee Soo Man’s divestment of his remaining shares in the company he founded, following the termination of the company’s production contract with Lee’s Like Planning in 2022. SM Entertainment’s official statement in February 2023 stated they would restructure the company without the help of Lee, adopting a multi-production center system to replace his role as chief producer.

HYBE’s previous attempt to acquire a 40% stake in SM Entertainment faced resistance, leading to a takeover attempt withdrawal in March 2023. Kakao Corp. subsequently became SM Entertainment’s largest shareholder, holding a 39.87% stake. The company’s latest move underscores its ongoing commitment to its strategic partnership with SM Entertainment and the broader K-pop market.

In the financial realm, the K-pop juggernaut’s annual revenues for FY 2023 soared by 22.6% year-over-year, reaching an impressive 2.178 trillion South Korean won (equivalent to $1.66 billion at the average annual exchange rate). This notable success comes amidst challenges in the market, showcased by SM Entertainment reporting a 3.4% year-over-year drop in revenue for Q4 2023, amounting to KRW 250 billion (USD $189.3 million). Despite the dynamic landscape, HYBE’s strategic investments underscore its commitment to navigating and thriving in the ever-evolving world of K-Pop.