HYBE President Bang Si Hyuk recently discussed the agency’s recent battle with Kakao, BTS’ recruitment and contract renewals, and more.
On March 15, Bang Si Hyuk attended the Kwanhun Forum where he shared an in-depth explanation of HYBE’s recent withdrawal from the acquisition of SM Entertainment and Lee Soo Man’s reaction.
Last month, HYBE signed a deal with SM Entertainment founder Lee Soo Man to buy a 14.8 percent stake in the company, making them the largest shareholder. The deal was in response to Kakao’s attempt to buy 9.05 percent of SM Entertainment through the purchase of newly issued shares and convertible bonds – an attempt that Lee Soo Man denounced as illegal and which he successfully blocked by taking SM Entertainment to court, where his request for warrant.
Since SM Entertainment was legally barred from issuing new shares or convertible bonds to Kakao, the conglomerate began trying to buy shares from existing shareholders instead. Earlier this week, Kakao made a new tender offer to SM Entertainment shareholders at a price higher than the one recently offered by HYBE.
Following reports that HYBE and Kakao had come to an agreement over their fight for management rights and control of SM Entertainment, it was confirmed on March 12 that HYBE had withdrawn from the acquisition as a result.
Bang Si Hyuk started by revealing that he personally feels very comfortable with the decision. He explained that the agency had been in talks about acquiring SM Entertainment since 2019 and added, “It’s true that we had already made two offers at that time and were turned down.” On how the latter situation came about, Bang Si Hyuk said, “I received a sudden call from Lee Soo Man and he asked about my intention to purchase shares. While there was some internal debate, I believed that many of the factors opposing our takeover at the time had vanished, which led me to take the decision to take over.”
The Chairman then addressed how the situation had grown disproportionately, saying: “The competitive takeover battle was beyond our expectations. Since we had been thinking about SM for a long time, we had clear values. However, from a certain point we felt that we had exceeded these values, and that’s when our concerns began.”
Ultimately, Bang Si Hyuk explained that the agency decided to withdraw from the acquisition because it was not “HYBE-like.” He explained, “‘HYBE-like’ is the right choice, a choice that doesn’t make members feel ashamed. At every moment it seemed to me that I had to make a reasonable and right decision. In the process of replacing value that we had in mind when we started this takeover battle, we decided we couldn’t go on, undermining shareholder value and shaking up market value.
Touching on Lee Soo Man’s response to HYBE’s withdrawal, Bang Si Hyuk said that he couldn’t tell Lee Soo Man the truth when agreeing their deal with Kakao and instead explained it to him after the deal. He continued, “He didn’t show any particular emotion. He just said, “Why do you stop when you can win?” I’m not sure he was disappointed. Even if he was disappointed, I don’t think he would show it to me, who is much younger than him.
Bang Si Hyuk also apologized to the artists and fans who were hurt and confused by this battle, stating that this was another reason for HYBE’s decision to pull out.
He said: “Last weekend, BoA held a 20th anniversary concert. First of all, I want to congratulate her. While it’s true that big companies have contributed greatly to getting K-pop to this point, there’s no denying the truth that artists have led the industry itself. Thanking the artists and fans for standing firm during this highly publicized battle, Bang Si Hyuk commented, “Even when there was talk of an aggressive story that sees the takeover as a war, the artists stayed true to their work even when their hearts ached. The fans also showed their support from their stands.”
Bang Si Hyuk explained that he personally never saw the situation as a war and added: “As someone who is in management, my heart was aching and I apologized. The main goal is the happiness of artists and fans. I couldn’t sleep wondering if the suffering of artists and fans was right. I want to take this opportunity to apologize.”
Bang Si Hyuk also raised the issue of BTS, who last June announced an indefinite hiatus from their group activities to focus on their solo careers and start recruiting for the military. Jin became the first member to enlist in December, while J-Hope is currently in the recruiting process.
He explained: “We shared it [HYBE] and members hope to be able to resume operations [group activities] around 2025 rather than “resume” in 2025. So I hope you don’t think of that as a target year. But [HYBE] and BTS will do our best. The military issue is not something that will be resolved as planned and as we also need time to prepare for their return when they return [from the military], I mean we can’t go on with the “promised year”. But it’s not just a false hope because both parties have agreed to really actively give their best.”
Regarding the recruiting dates for the rest of BTS, Bang Si Hyuk explained that he couldn’t say much because the recruiting dates are considered personal information. However, he stressed that as stated earlier, the agency would be transparent about recruitment dates as soon as they were set.
When asked about BTS’s contract renewal, Bang Si Hyuk replied, “As you know, the social impact of renewing a contract for a group of BTS’s scale is big, so I’m careful [to speak on these matters]. In the case of BTS, we revealed the terms of their contract for transparency, and they still have some time left. We’ll finish talking at this time and I think it’s a courtesy to the artist and the fans that we’re talking after these discussions are over.
While 28 is typically the maximum age a South Korean man can wait to do his mandatory military service, BTS members have been allowed to defer enlistment due to a new amendment that was passed in December 2020 called the “Military Service Amendment” BTS” in light of its clear implications for BTS, the act allows artists who receive a recommendation from the Minister of Culture, Sports and Tourism to defer mandatory service until the age of 30 according to international settlement.
For years before BTS officially announced their plans to enlist, there was a debate among politicians and civilians about whether members should be released from service, given their contributions to Korean culture on a global scale. The issue mainly relates to the current special military exemption criteria, which are not broad enough to include contributions to contemporary art. For example, in sports, athletes who win a bronze or higher medal at the Olympics or win gold at the Asian Games qualify for this special exemption.
Sharing his personal thoughts on the debate, Bang Si Hyuk commented, “Looking at an individual’s career and national assets, I can’t say that [enlistment] there is no loss. I believe it is true that career continuity or the value of national wealth is cut off or begins to decline. However, it is quite another matter to joyfully accept military duty as a citizen of the country. The country made such a decision and for almost three years [BTS] he still says about the matter, “We will go when we are called.” Bang Si Hyuk added that they are very happy with their decision to enlist in the army.
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