SEOUL, May 28 (AJP) - HYBE, South Korea’s largest entertainment company behind BTS, has sold its entire stake in rival agency SM Entertainment to China's Tencent Music Entertainment.
In a regulatory filing, Tuesday, HYBE said it would offload its 9.38 percent stake — totaling about 2.2 million shares — to Tencent Music, a subsidiary of China’s internet giant Tencent.
The shares were sold at 110,000 won apiece, bringing the total transaction to approximately 243.3 billion won (about $180 million).
The transaction positions Tencent Music as SM Entertainment’s second-largest shareholder, behind Kakao and its affiliate Kakao Entertainment, which together control a 41.5 percent stake in the company.
HYBE had acquired its stake in SM in early 2023 during a high-profile battle for management control — a power struggle that eventually ended with Kakao taking the lead.
In a statement, HYBE framed the sale as part of a broader strategic realignment, saying it aims to divest non-core assets and reinvest proceeds into “future growth initiatives.”
Industry analysts view the deal as a significant move by Tencent to deepen its presence in South Korea’s K-pop industry.
“Tencent’s growing footprint is hard to ignore,” said Lee Ki-hoon, an analyst at Hana Securities. “This investment raises expectations for SM, especially if restrictions on Korean pop culture in China begin to ease.”
Tencent Music has been active in Korea through distribution partnerships with major agencies, including HYBE and Cube Entertainment. Its broader corporate ecosystem also holds minority stakes in YG Entertainment (4.3 percent) and Kakao Entertainment (4.61 percent), reinforcing its role as a major external stakeholder in the Korean entertainment industry.
The acquisition of SM shares offers Tencent a deeper stake in one of K-pop’s most influential players.
Known for cultivating first-generation acts such as H.O.T. and pioneering the Korean Wave in China, SM Entertainment remains a key source of intellectual property, artist management, and production capabilities.
For HYBE, the sale represents a full exit from SM, closing the chapter on a costly and contentious corporate rivalry. HYBE is estimated to have invested approximately 555 billion won in SM and has reportedly recouped about 560 billion won through this and previous share disposals.
The deal also comes amid broader questions about Chinese investment in South Korea’s cultural sector.
While political tensions have, at times, limited K-pop’s access to Chinese audiences, some analysts believe the tide may be shifting. A renewed SM-Tencent alignment could position both companies to benefit from any loosening of cultural restrictions in the Chinese market.
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