(LEAD) Hybe to become largest shareholder in SM Entertainment

▲ K-pop agency Hybe's logo is seen in this image from its homepage. (PHOTO NOT FOR SALE) (Yonhap)

(LEAD) Hybe-SM Entertainment

(LEAD) Hybe to become largest shareholder in SM Entertainment

(ATTN: UPDATES with more details from fourth para; ADDS image)

By Kim Eun-jung

SEOUL, Feb. 10 (Yonhap) -- Hybe, the Korean entertainment agency behind supergroup BTS, said Friday it will acquire a 14.8 percent stake in its rival K-pop agency SM Entertainment to become its largest shareholder.

Hybe said in a regulatory filing that it will buy the shares from SM Entertainment founder Lee Soo-man for 422.8 billion won (US$335.8 million).

Lee previously held a 18.46 percent stake in SM Entertainment.

"The deal is aimed at strengthening (Hybe's) competitiveness in the K-pop market and creating a synergy effect," Hybe said in the filing.

Hybe is home to global K-pop acts such as BTS, Seventeen, Tomorrow X Together, Enhypen, NewJeans and Le Sserafim, while SM Entertainment is one of the country's top K-pop agencies, with big-name K-pop acts like EXO, Red Velvet, NCT and aespa under its belt.

The latest move comes amid an ongoing management dispute between the founder and other senior executives.

On Tuesday, Kakao Corp., operator of mobile messenger KakaoTalk, announced it has signed a deal to buy a 9.05 percent stake in SM Entertainment for 217.2 billion won to become the second-largest shareholder.

Although SM Entertainment claimed the deal was aimed at diversifying its business portfolio, Lee filed for an injunction to stop the transaction.

On Friday, SM Entertainment issued a statement to voice opposition to Lee's deal with Hybe.

"There are attempts to sell (company's) stakes and acquire them, which neglect SM's past efforts and values artists have pursued together," co-CEOs Lee Sung-soo, Tak Young-joon and other executives said in the statement.

The company said it ended the contract with Lee last year as the founder has taken excessive operating profits for years and undermined shareholder rights.

"The strategic partnership with Kakao was in line with the company's decision-making process and has nothing to do with the largest shareholder's claim that it is related to the management dispute," it added.

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