Tencent Acquires Hybe’s Stake in SM Entertainment Ahead of China’s K-pop Ban Lift
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Tencent Holdings is acquiring a nearly 10% stake in SM Entertainment from BTS agency Hybe, in a deal valued at approximately USD 180 million.
The Chinese tech giant will purchase 2.2 million shares at 110,000 won (USD 80.34) each, representing a 15.3% discount to SM Entertainment’s closing price on Tuesday, according to a regulatory filing.
This marks Tencent’s first major investment in South Korea’s music industry in years and comes as China is expected to lift its unofficial ban on K-pop performances.
The ban, imposed in 2016, was a response to South Korea’s deployment of the US THAAD missile defence system. Before the restrictions, China was one of the fastest-growing markets for K-pop.
The deal could allow SM Entertainment to resume music distribution in China through Tencent’s platforms.
Tencent already holds a 4.3% stake in YG Entertainment, the agency behind Blackpink, and a 5.95% stake in Kakao Corp, South Korea’s largest internet company and SM Entertainment’s biggest shareholder.
Hybe’s sale ends a prolonged battle for control of SM Entertainment. In 2023, both Hybe and Kakao attempted to acquire the company, but Hybe withdrew after rising share prices made the deal too costly.
The bidding war also led to regulatory scrutiny of Kakao founder Brian Kim Beom-su, who was accused of attempting to manipulate SM Entertainment’s stock. Kim has denied the allegations.
Hybe stated that the divestment is part of its strategy to offload noncore assets and redirect funds toward future growth.
South Korean entertainment stocks have surged this year amid expectations of reduced trade tensions and the potential lifting of China’s K-pop ban.
SM Entertainment shares have risen 72% in 2024, while YG Entertainment has gained 77%.
Tencent is buying a 10% stake in SM Entertainment from Hybe for USD 180 million
The deal comes ahead of China potentially lifting its K-pop ban
Hybe is exiting SM Entertainment after a failed takeover bid in 2023
Source: SCMP