After HYBE reportedly attempted to become the controlling shareholder of SM Entertainment last year, founder Lee Soo Man ultimately rejected the proposition—here’s a simple explanation as to why according to investment banking reports.

When did HYBE propose buying SM Entertainment shares?

Right now, Naver and Kakao Entertainment are the key players in the running to acquire all or part of Lee Soo Man’s 18.73% controlling stake in SM Entertainment, but there have been other companies on the table in the past. Most notably, Korean media recently reported that HYBE proposed acquiring SM Entertainment shares back in 2020 when talk of Lee Soo Man’s intention to sell first circulated around the industry.

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HYBE CEO Bang Si Hyuk

What other companies has HYBE acquired?

SM Entertainment wouldn’t be the first K-Pop agency HYBE has been interested in acquiring. Back in July 2019, when the company was still known as Big Hit Entertainment, HYBE wholly acquired Source Music—the former home of GFRIEND. Last year, HYBE also became the owner of KOZ Entertainment, an entertainment agency founded by soloist Zico.

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GFRIEND | Source Music

Plus, the home of BTS and TXT also became the majority shareholder of Pledis Entertainment (SEVENTEEN, NU’EST) after purchasing an 85% stake in the company back in 2020. There have even been rumors that HYBE was interested in acquiring RBW and Cube Entertainment in the past.

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SEVENTEEN | Pledis Entertainment

Why did Lee Soo Man reject HYBE’s proposition?

All that said, HYBE’s proposed deal to acquire shares in SM Entertainment was eventually canceled last year—but why? According to new reports from investment banking insiders, it’s all down to Lee Soo Man’s proposed involvement with the company.

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Lee Soo Man | SM Entertainment

It’s said that Lee Soo Man rejected the offer because HYBE already understands how to run a K-Pop agency successfully. As such, this would leave no place for his expertise in the company. Thus, it seems that Lee intends to remain a key figurehead in the industry despite selling his stake in SM Entertainment.

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| SM Entertainment

There has also been speculation that SM Entertainment’s recent tax investigation, which saw the company ordered to pay ₩20.0 billion KRW (about $18.0 million USD) to the government, played a part in the dissolution of the proposed HYBE deal, but there’s currently no evidence to suggest this was the case.

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Lee Soo Man

Who else has been in the running to acquire SM Entertainment?

HYBE isn’t the only company that was previously in talks to a stake in SM Entertainment. When Lee Soo Many began planning to sell his shares, he reportedly discussed acquisition with Chinese companies like Tencent—unsurprising given that China technology conglomerate Alibaba is currently the third-largest SM Entertainment shareholder.

Now, the most likely investors are Naver and Kakao Entertainment.

Here’s Why Naver & Kakao Are Trying To Acquire SM Entertainment Shares (& What Will Happen If They Do)