HYBE sells 3.2% stake in SM Entertainment for $50.2M

HYBE's headquarters in central Seoul

HYBE, the K-pop powerhouse behind BTS and NewJeans, offloaded a 3.2 percent stake in SM Entertainment via a block deal worth 68.4 billion won ($50.2 million), according to HYBE’s electronic disclosure on Tuesday.

The shares were priced at 90,531 won, a discount of 5.5 percent from SM's closing price of 95,800 won on Monday.

The sell-off was made before the stock market opened on Tuesday.

The number of shares amounts to 755,522. After the block deal, HYBE retains a 9.38 percent stake in SM Entertainment.

HYBE briefly stated the reason for the deal as "the optimization of investment and asset management."

In a demand survey held on Monday, HYBE planned to sell up to 940,000 shares with a discount rate of 4 to 5.5 percent.

In the actual block deal, only the basic quantity was disposed of, and the maximum discount rate was applied.

During the peak of the takeover battle for SM Entertainment last year, HYBE and Kakao fought to gain more shares in the K-pop agency to secure a controlling stake in the company.

Kakao came out as the winner, with Kakao and Kakao Entertainment becoming the largest shareholders with 20.97 percent and 19.31 percent stakes, respectively, according to SM's electronics disclosure in May.

HYBE initially acquired a 14.8 percent stake in SM Entertainment from the company's founder, Lee Soo-man, for 120,000 won per share during the takeover fight, but offloaded some of its shares to push down its stake to the 8 percent level after Kakao gained management control of the company.

The BTS record label gained an additional 3.68 percent stake in February as Lee exercised his put option for remaining shares. After the transaction, Lee no longer holds any stake in the K-pop agency.

SM Entertainment shares slipped 5.32 percent to close at 90,700 won on Tuesday, while HYBE shares dipped 1.72 percent to 200,000 won.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]