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HYBE Expected To Net $87 Million After Selling All Of Its SM Entertainment Shares

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HYBE Expected To Net $87 Million After Selling All Of Its SM Entertainment Shares

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HYBE Expected To Net  Million After Selling All Of Its SM Entertainment Shares
HYBE Expected To Net  Million After Selling All Of Its SM Entertainment Shares

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K-pop group HYBE has announced it has taken over its 15.8% stake in rival talent agency SM Entertainment, following plans to sell it to South Korean internet giant Kakao.

HYBE, which includes groups such as BTS , SEVENTEEN , NewJeans , THE SSERAFIM and others , announced on Friday that it will sell 3.75 million shares of SM Entertainment for $437 million as part of an appeal .

The proposed sale of SM Entertainment stock is expected to generate approximately $87 million in proceeds, representing a 25% premium to the original purchase price. However, not all of the shares on offer can be bought by Kakao, as this would make it more than the 35% stake it plans to acquire on Sunday. All other shares may be traded on the currency. If successful, Kakao will become SM Entertainment's largest shareholder.

In February, Kakao acquired a 14.8% stake in SM Entertainment from departed founder Lee So Man .

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Their plan was to buy the remaining 3% of Lee's shares and make an open offer to other shareholders for an additional 15%.

These takedown plans were met with opposition from SM Entertainment's management , who termed it as a "hostile invasion". The associates posted a series of videos expressing their grievances on the company's YouTube channel and on their personal platforms. CEO Chris Lee, Lee So Man's nephew, said his uncle was involved in overseas tax evasion and was responsible for delays in SM artists' projects.

SM sought the participation of Kakao and its subsidiary Kakao Entertainment, who presented their own partnership proposal. This includes a content distribution agreement as well as the issuance of new cocoa stock and bonds.

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Kakao Entertainment has made a more favorable offer to shareholders for up to 35% of the company's existing capital after a court order barred SM Entertainment's management from making a takeover bid .

In response, HYBE abandoned the initial bid on March 12 , admitting it was insufficient .

Putting the battles aside, a three-way deal was announced where Kakao took over SMS and HYBE made a deal to work with HYBE's biggest online fans.

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SM Entertainment has expressed its support for Kakao's takeover bid, saying the deal will "provide the company with self-sustainable and independent management."

HYBE founder Bang Si Hyuk tried to acquire SM Entertainment twice before the company previously failed in a takeover bid in 2023.

Shares of Kakao and SMS Entertainment rose about 0.5%, while Hybe shares fell about 0.5% after the announcement of the three-way deal.

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