SEOUL, March 01 (Yonhap) — SM Entertainment, a South Korean agency behind several K-pop stars, has asked for support from its minority shareholders ahead of a scheduled general meeting following a recent takeover bid by its industrial rival Hybe.
According to industry sources, SM on Wednesday sent letters to small shareholders pledging to pay a dividend of 1,200 won ($0.90) per share. SM has scheduled a general meeting of shareholders on March 31.
On the cover were the words “SM Board Recommendations” in a circle and a red “X” above the words “Former Major Shareholder Lee Soo-man’s Proposals,” referring to SM’s founder.
Hybe, the K-pop powerhouse known for producing global sensation BTS, becomes the first shareholder of SM on February 22, acquiring a 14.8% stake from Lee, who held an 18.46% stake in his namesake company.
His remaining stake is also expected to transfer to Hybe this year, as the deal included a put option that gives Lee the right to sell the remaining shares at a specific price within a month of approval. business consolidation or the day the deal is done.
In its letter to underage shareholders, SM called the ongoing saga “a critical turning point in events that will never happen again in the Korean entertainment industry.”
“Your decisions will significantly affect the future of our business,” the letter read. “This year’s shareholders’ meeting is the last opportunity for us to elevate the value of our company as an entertainment company with the largest talent pool in the country, and also to address the governance issues of SMs that have persisted for more than a decade.”
During a Q&A session, SM challenged the idea that the takeover by Hybe, which runs successful labels such as BigHit Music, Pledis Entertainment and ADOR, could be a boon for SM.
“When Hybe finds talented new artists, produces great music, or finds great choreographers, he’ll send them to labels where he has higher stakes than in SM, like BigHit, ADOR, Source Music, and Pledis,” reads- we in the letter. BTS is a BigHit artist and ADOR hit it big with new girl group NewJeans.
“If Hybe only owns 40% of SM shares and other regular shareholders own the remaining 60%, there is bound to be a conflict of interest between SM shareholders and Hybe shareholders,” the letter continues. “Hybe and SM are the two biggest rivals in this industry.”
In defiance of Hybe’s takeover bid, SM recently reached an agreement with Kakao Entertainmentconferring on the latter the exclusive rights to distribute SM’s music and also conferring on it a right of first refusal for the purchase of new SM shares.
Hybe threat of legal action against displacement.
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