HYBE is moving forward with a block deal for its 750,000 shares in SM Entertainment, aiming to capitalize on the recent surge in SM’s stock price. According to sources within the investment banking industry, HYBE commenced institutional book building for this stake immediately after the market closed on May 27. The sale is expected to be at a discount rate of 4% to 5.5%, pricing the shares between 90,531 and 91,968 won each (approximately $66.42 to $67.47), compared to the closing price of 95,800 won.
Samsung Securities is leading the underwriting for this transaction. HYBE currently holds 2,967,759 shares, representing a 12.45% stake in SM Entertainment. Given that this is a minority stake without management control, HYBE has opted to realize profits through this large-scale sale. SM’s stock has appreciated nearly 20% over the past month, driven by the lifting of the Chinese government’s ban on Korean culture, enhancing market expectations.
HYBE plans to convene a board meeting either on the night of the demand forecast’s completion or before the market opens the next day to finalize the relevant matters. This move follows last year’s management dispute at SM, where HYBE initially acquired a 14.8% stake from SM’s founder, Lee Soo-man, for 422.8 billion won. Subsequently, HYBE sold part of its holdings to Kakao and acquired an additional 3.68% stake when Lee exercised put options as per the share acquisition agreement.
By strategically selling a portion of its stake now, HYBE aims to benefit from the favorable market conditions while maintaining a streamlined investment portfolio.
