HYBE Chairman Expresses Mixed Feelings on Kakao Acquisition at Guanhun Forum
SEOUL — During the Guanhun Forum held on March 15th, Bang Si-hyuk, the Chairman of HYBE, expressed his thoughts on the recent acquisition by Kakao.
"It's difficult to view the acquisition solely as a win," Bang said, "Personally, I am very satisfied with the agreement we reached with Kakao regarding our platform, which is the most important pillar of our future."
Bang also mentioned, "We couldn't upset the market order even if we wanted to take over."
During the forum, Chairman Bang revealed the behind-the-scenes story of HYBE's attempt to acquire SM, which had been ongoing since 2019. Bang stated that they had reviewed the acquisition of SM twice and had proposed it to SM, but it was rejected. Lee Soo-man, the former general producer of SM, was then contacted about his intention to acquire the stake, and after an internal review, HYBE began to pursue the acquisition of SM in earnest.
Regarding the acquisition, there were internal opinions that were in favor of the need to grow the size of K-pop as part of the global growth engine, while others objected, saying that it would be better to spend that amount of money more innovatively in the global market. After a short discussion, Bang decided to acquire SM, thinking that many factors that had previously opposed the acquisition had disappeared.
However, HYBE also stated that they did not anticipate the unexpected rise in SM's stock price, which caused a fierce "war of money" with SM's current management and Kakao. As a result, HYBE decided to cooperate with Kakao on the platform instead of acquiring SM's management rights.
Bang explained the background of the suspension of the acquisition, saying that the market had overheated to the point where they could not view it as a war without damaging shareholder value and shaking the market order. He also stated that the tangible and intangible costs of acquisition were significant and that they decided to invest a little more in innovative companies to pursue their original roadmap of going global.
Lee Soo-man, the former general producer of SM Entertainment, reportedly said, "I could win, but why bother?" after selling his stake in the company to HYBE following negotiations with Kakao. HYBE recently announced their decision to cooperate with Kakao on the platform rather than acquiring SM's management rights.
Chairman Bang of HYBE explained the process to Lee Soo-man, and when the latter heard the news of the deal, he reportedly responded, "Why stop when we can win?" The focus now is on the direction of Lee's 15.8% stake in SM, but Chairman Bang declined to give an immediate answer, stating that he is "attempting to make a reasonable choice."
When asked about the details of the platform cooperation with Kakao, Chairman Bang did not comment, but mentioned that they are preparing for practical cooperation in the near future.
There has been criticism of contracts signed with Lee Soo-man that include ESG (Environmental, Social, and Governance) support items. Chairman Bang stated that there is no benefit to individuals, and that they will use the budget approved by the board of directors. He also stated that there was something unfair in the acquisition process.
Regarding the crisis facing K-pop and its breakthrough, Chairman Bang expressed his views. He stated, "The slowdown in K-pop indicators is evident. There is no denying the numbers," and added, "The primary reason for this is the absence of BTS." He stressed the need to expand K-pop beyond "Korean things," and announced his ambition to become "an unignorable player in the U.S. music market" by acquiring one or two major labels in the Latin and U.S. markets.
Chairman Bang emphasized the importance of having a sizable economy to develop bargaining power against global retailers. He also talked about the future of BTS, stating, "We and our members hope to resume (complete activities) by 2025. We have agreed to make a real effort." He added, "We still have some time left until the contract period, so we will discuss it during that time."
Personal satisfaction with the agreement on platform cooperation
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