HYBE has announced that it will be selling off its holdings in SM Entertainment.
The disclosure made on the 24th revealed that HYBE’s board of directors had passed a resolution to dispose of 3,757,237 shares (19.43 percent) out of the 4,626,185 shares held in SM Entertainment. This amounts to 85 percent of SM Entertainment’s shares held by HYBE, valued at KRW 56.358 billion ($43.7 million).
HYBE explained that it had made this decision after withdrawing its acquisition of the management rights of the issuing company.
Previously, HYBE had acquired SM shares through a stock purchase agreement (SPA) and public purchase at KRW 120,000 ($93) per share with Lee Soo Man, the former general producer of SM Entertainment. However, HYBE later withdrew from the competition with Kakao Corp. and others to acquire management control of SM Entertainment, announcing on the 12th that it would no longer pursue the deal.
Selling the shares at KRW 150,000 ($116.2) per unit, which is higher than the acquisition price, will allow HYBE to make a profit of KRW 30,000 ($23.2) per unit, or about KRW 112.7 billion in total.
There is speculation that HYBE could be the ultimate winner of the war over the management rights of SM Entertainment. The company made a profit equal to half of last year’s operating profit of KRW 237.7 billion ($184.1 million) just six weeks after the transaction. However, some individual investors who bought SM Entertainment shares through public purchases by Kakao are expressing dissatisfaction, saying that they have to bear the loss.