Bang Si Hyuk Breaks Down HYBE’s Withdrawal From SM Acquisition, BTS’s Return From Hiatus 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 its acquisition of SM Entertainment and Lee Soo Man’s reaction.
Last month, HYBE signed a deal with SM Entertainment founder Lee Soo Man to acquire a 14.8 percent stake in the company, making them the largest shareholder. The deal came in response to Kakao’s attempt to purchase a 9.05 percent stake in SM Entertainment by buying 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 an injunction was granted.
With SM Entertainment legally banned from issuing new shares or convertible bonds to Kakao, the conglomerate moved on to attempting to buy shares from existing stockholders instead. Earlier this week, Kakao made a new tender offer to SM Entertainment shareholders at a higher price than what was recently offered by HYBE.
Following reports that HYBE and Kakao had come to an agreement regarding their battle for management rights and control of SM Entertainment, it was confirmed on March 12 that the result was HYBE’s withdrawal from the acquisition.
Bang Si Hyuk began by revealing that he personally felt very good about the decision. He explained that the agency had been discussing the acquisition of SM Entertainment since 2019 and added, “It’s true that we already put in two offers back then and got rejected.” On how this recent situation came to be, Bang Si Hyuk shared, “I got a sudden call from Lee Soo Man and he asked about my intention to acquire shares. While there was a brief debate internally, I believed that a lot of the factors opposing our acquisition back then had disappeared, which made me decide on our takeover.”
The chairman then touched on how the situation blew out of proportion, saying, “The competitive acquisition battle was outside of our predictions. As we had thought about SM for a long time, we had clear values. However, from a certain point on, we felt that we had overstepped those values and that’s when our concerns began.”
Ultimately, Bang Si Hyuk explained that the agency decided to withdraw from the acquisition as it was not “HYBE-like.” He elaborated, “‘HYBE-like’ is the right choice, and the choice that does not make members feel ashamed. At any moment, I thought that I had to make a reasonable and correct decision. In the process of already overriding the values we were thinking of when we entered this acquisition battle, we decided that we could not continue while undermining shareholder value and shaking up market value.”
Touching on Lee Soo Man’s response to HYBE’s withdrawal, Bang Si Hyuk shared that he could not tell Lee Soo Man the truth while arranging their agreement with Kakao and instead explained it to him once the deal was done. He continued, “He didn’t specifically show any emotion. All he said was ‘Why are you stopping when you can win?’ I’m not sure if he was disappointed. Even if he was disappointed, I don’t think he would’ve shown that in front of me, who is very much his junior.”
Bang Si Hyuk also apologized to artists and fans who were hurt and confused by this battle, stating that this was another one of the reasons behind HYBE’s decision to withdraw.
He shared, “Last weekend, BoA held her 20th anniversary concert. For starters, I want to congratulate her. Although it’s true that large companies have contributed greatly to bringing K-pop to this point, you can’t deny the truth that artists have led the industry itself.” Thanking artists and fans for sitting tight throughout this highly publicized battle, Bang Si Hyuk commented, “Even when talking about the aggressive story that views the acquisition as war, artists stayed true to their work even while their hearts were hurting. Fans also showed their support from their positions.”
Bang Si Hyuk explained that he personally never saw this situation as a war and added, “As someone who does management, my heart hurt and I felt apologetic. The core goal is the happiness of artists and fans. I lost sleep wondering whether it was right for artists and fans to suffer. I want to take this opportunity to say I’m sorry.”
Bang Si Hyuk also touched on BTS, who announced an indefinite hiatus from group activities last June to focus on their solo careers and begin their military enlistments. Jin became the first member to enlist back in December while J-Hope is currently in the midst of his enlistment process.
He clarified, “We shared that both [HYBE] and the members hope to be able to resume [group activities] around 2025, not ‘they will resume’ in 2025. On that note, I hope you will not think of this as the target year. But [HYBE] and BTS will try our best. The issue of the military is not something that gets resolved as planned, and since we also need time to prepare for their return once they come back [from the military], I want to say that we cannot continue with a ‘promised year.’ But this is not just false hope as both parties have agreed to really actively do our best.”
Regarding the enlistment dates for the rest of BTS, Bang Si Hyuk explained that he could not say much as their enlistment timelines are considered personal information. However, he emphasized that as stated previously, the agency would be transparent with their enlistment dates once they are decided.
When asked about BTS’s contract renewals, Bang Si Hyuk responded, “As you know, the social impact of a contract renewal for a group of BTS’ scale is large, so I’m careful [to speak on these matters]. In the case of BTS, we’ve revealed their contract terms for the sake of transparency and they still have some time left. We will end up talking in that time, and I believe it is a courtesy to the artist and fans that we speak once those discussions have ended.”
While 28 years old is typically the maximum age until which a South Korean man can wait to fulfill his mandatory military service, the BTS members had been allowed to defer their military enlistment due to a new amendment that was passed in December 2020. Dubbed the “BTS military service amendment” in light of its clear implications for BTS, the law allows artists who receive the recommendation of the Minister of Culture, Sports, and Tourism to postpone their mandatory service until they turn 30 years old by international reckoning.
For years before BTS officially announced their plans to enlist, there was an ongoing debate among politicians and civilians about whether the members should be exempt from their service considering their contributions to Korean culture on a global scale. The issue mainly deals with the current criteria for special military exemption, which does not expand broad enough to consider modern arts contributions. In sports for example, athletes who win bronze or higher in the Olympics or win gold at the Asian Games are eligible for this special exemption.
Sharing his personal thoughts on this debate, Bang Si Hyuk commented, “When looking at an individual’s career and national assets, I can’t say that [enlistment] is without loss. I believe it’s the truth that the continuity of one’s career or the value of national assets gets cut off or begins declining. However, it is a completely different matter for an individual to happily accept their military duty as a citizen of a country. The country has made this decision and for nearly three years, [BTS] has continued to say of this matter, ‘we will go once we are called.” Bang Si Hyuk added that they are very happy about their decision to enlist in the military.