SM Entertainment’s CEO Lee Sung Soo Calls Out HYBE For Their “Hostile M&A” That Could Monopolize The Industry
As SM Entertainment founder Lee Soo Man and the company’s current management go head-to-head, new CEO Lee Sung Soo has been releasing videos that severely criticize Lee Soo Man’s management. Previously, on February 16, 2023, Lee Sung Soo released a video exposé that accused Lee Soo Man of mismanagement, embezzlement and tax evasion. Lee Sung Soo addressed his late aunt’s husband Lee Soo Man, in a new video published February 17, 2023.
He asked Lee Soo Man to stop and beg for forgiveness and explained why the HYBE M&A was “hostile.”
Teacher. Please stop now. Please now, kneel in front of everyone and ask for their forgiveness, along with me. I hope you know that this is the only way that I, as your student, can save you from the Valley of Hell. Now, come out of that place, escape from the crowd of eunuchs, go through your KWANGYA, and go back to your family once more. And what you’ve always preached, “Be Humble, Be Kind, Be the Love,” I will pray together that you can put this into action for the rest of your life.
— Lee Sung Soo
He cast doubt on the way that HYBE chose to enter SM Entertainment.
Let me ask a few questions to HYBE.
1. Is it not a hostile M&A if HYBE buys up a majority of the shares through a public acquisition without any prior discussion with any of the SM Entertainment directors or management?
2. Is is not a hostile M&A if Lee Soo Man recommended seven registered directors on February 15 through a shareholders proposal if three on the list are in-house members?
3. A deal of 1 trillion won ₩1.00 trillion KRW (about $775 million USD) without any due diligence. Isn’t that the textbook form of a hostile M&A?
One more.
4. Through media reports you said that you would introduce a policy that allocates less than 30% of profit. HYBE has never paid out cash dividends since its establishment. What percentage of its net profit will you plan to pay shareholders the year?
5. In your shareholders proposal, you separated your company’s CEO and the chairman of the board of directors, while you elected a chairman that is not your in-house director. Who is HYBE’s current chairman of the board of direcotrs? Are they an external director?
6. In your shareholders proposal, you asked us to introduce electronic voting as part of a change in the company’s articles of association. Are you trying to introduce electronic voting through the company’s articles of association? HYBE submitted the proposal through Lee Soo Man. You said that you would respect SM’s brand and IP, and you were so confident in announcing that you would not place creators and producers with entertainment experience in the candidate list of directors. An entertainment company’s identity is not only created from IP. SM is a certified company, and a listed one with shareholders. We have already decided to follow the wishes of the shareholders, and have begun a major overhaul in all areas, including transparent management and governance. We have formed a global advisory body and have a group of legal experts we will consult with as we step up preparations to open a truly new, SM ver3.0.
We thank you for your concern but your recommendation of seven directors seems to only be intended to erase SM Entertainment and make it a subsidiary of HYBE, even though you say that you support our independent management.
— Lee Sung Soo
He concluded by asking HYBE to halt in their tracks, and asked for healthy competition instead of monopoly.
HYBE is Lee Soo Man’s savior, not SM’s. I think culture cannot, and should not, be monopolized. Respect for diversity is the fundamental spirit of the culture industry. Please halt your hostile M&A so that K-Pop in Korea does not become monopolized. I hope that you will have a good-spirited competition with the newly changed SM, and together, I hope that we will do a good job of introducing K-Pop to the world and expand the culture. I will do all that is in my power to stop the M&A, which our staff are also against.
— Lee Sung Soo
Earlier in the day on February 17, a collective of 208 regular staff from SM Entertainment released a joint statement, voicing their support for Lee Sung Soo. They also termed the acquisition as hostile, claiming that they would try to protect the SM that Lee Soo Man abandoned instead. Read about it below.
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