K-pop powerhouse Hybe will guarantee SM Entertainment's independence, noting that the founder and former producer of SM, Lee Soo-man, will not take part in business management, Hybe CEO Park Ji-won said to his employees Monday regarding the recent merger and acquisition of SM.
Last Friday, Hybe signed a deal with Lee Soo-man to buy 14.8 percent of his SM shares at 422.8 billion won ($334.28 million), making Hybe the largest shareholder of SM Entertainment.
"We respect the legacy of SM and we will secure the independence of SM. Hybe has already proven that our multi-label system works. SM has its own value and we will help them maintain their color and to expand their reach," Park emphasized.
In regards to Lee Soo-man, he stated clearly that Lee will no longer be participating in business management and production, and that he will also no longer be taking royalties.
Park predicted that the main players in the K-pop industry, including fans, artists, and employees of both companies, would benefit from the M&A.
On the same day, Executive Director at SM Entertainment, Cho Byung-kyu, sent an email to all SM employees stating that the side trying for a malicious M&A is not Hybe but Kakao.
"Hybe is proceeding with an amicable M&A but Kakao is trying to acquire shares to surpass those of Lee Soo-man. The executives of SM and Align Partners have joined hands with Kakao," Cho said.
A week ago, SM Entertainment and South Korean tech giant Kakao announced a partnership that involved Kakao acquiring a 9.05 percent stake in the K-pop entertainment company.
Meanwhile, many SM employees are taking their thoughts to the anonymous workplace chat app, Blind.
"We are a company that can stand alone without the help of Kakao and Hybe. I wish we could remain as SM led by the co-CEOs Lee Sung-soo and Tak Young-jun, and SM employees," one wrote.