Hybe to sell entire stake in SM Entertainment to China’s Tencent

K-pop powerhouse Hybe said Tuesday it will sell its entire stake in rival SM Entertainment to Tencent Music Entertainment Group, a subsidiary of China’s tech giant Tencent, for about 200 billion won (US$145.5 million).

Through the deal, Tencent Music will become the second-largest effective shareholder in SM Entertainment, following Kakao and Kakao Entertainment, which together hold a 41.5 percent stake.

Hybe said in a regulatory filing that it will sell 2,212,237 shares of SM, which represents a 9.38 percent stake in the company.

The shares will be sold at 110,000 won each, totaling about 243.3 billion won for the full transaction.

The sale is scheduled to be completed Friday after the market closes through an after-hours block trade.

Hybe acquired the stake in 2023 during a high-profile battle to take over SM Entertainment’s management rights.

“We divested non-core assets as part of a choice and concentration strategy,” the company said. “Secured funds will be used to secure future growth engines,” it added.

The music industry is watching closely Tencent Music’s acquisition of SM Entertainment, one of South Korea’s four major K-pop agencies.

Tencent Music has partnered with K-pop companies such as Hybe and Cube Entertainment by distributing their digital music. A separate subsidiary under Tencent holds stakes in major K-pop labels, including YG Entertainment (4.3 percent) and Kakao Entertainment (4.61 percent).

The acquisition of shares in SM, which owns a wide range of intellectual property, is expected to accelerate Tencent’s collaborations within the K-pop industry.

SM, a pioneer in expanding K-pop’s presence in China, is also expected to benefit from Tencent Music’s involvement.

An SM official said the company plans to “work more closely with Tencent Music” going forward.