HYBE and Kakao suffer massive losses for ‘SM takeover’ from Lee Soo-man + founder arrested

Article: “Sold for 120,000.. only Lee Soo-man is laughing” record-breaking 50,000 won drop…dying under Kakao

Source: Herald Economy

“Is the winner of the SM management dispute ultimately Lee Soo-man?”

SM Entertainment that seemed to be on a roll after former founder Lee Soo-man left and Kakao came in, is falling precipitously. The stock price, which was over 160,000 won, has plummeted to the 50,000 won range, which is hard to believe. As of the 4th, SM Entertainment’s stock price is 57,300 won. It has actually fallen even greater than the 70,000 won range over criticisms that they were not rising due to Lee Soo-man’s opaque management. 

The red light has also grown on the previously good performance. SM recorded sales of 253.9 billion won and operating profit of 24.7 billion won in the 2nd quarter of this year on a consolidated basis. Operating profit has decreased by over 30%. In the end, there is talk that the ultimate winner of the SM management dispute is former executive producer Lee Soo-man. The former founder received a huge sum of over 500 billion won by transferring his stocks to HYBE at 120,000 won/share. 

After Lee Soo-man sold his stocks, the stock plummeted. As the management dispute broke out, Kakao invested a whopping 1.2 trillion won, or 150,000 won/share in the acquisition of SM Entertainment. Kakao, which acquired SM through overseas capital, was put in an awkward position as the stock price plummeted. In particular, an unprecedented incident occurred in which founder Kim Bum-soo was arrested on charges of stock price manipulation during the acquisition of SM Entertainment. They are suffering a huge loss after acquiring SM Entertainment. 

HYBE, which purchased SM stocks from former general producer Lee Soo-man for 120,000 won, also faced a huge loss. Chairman Bang Si-hyuk led the stock purchase. HYBE sold some of its stocks, but currently owns a 9.38% stake. Considering that it previously sold some of its stocks to Kakao for 150,000 won, it will suffer a loss if the stock price falls to 92,000-93,000 won.

At the time of the management dispute, SM executives were confident that if former CEO Lee Soo-man stepped down, they would be able to achieve sales of 1.8 trillion won and operating profit of 500 billion won by 2025. They boasted, “We are confident that a target stock price (in the 300,000 won range) will not be an impossible number,” but it has become a boomerang. It’s not in 300,000 won, in reality, it’s in the 50,000 won range.

About a year ago, HYBE and Kakao fought for over a month to take over SM management rights, and dramatically compromised and SM Entertainment was placed in the arms of Kakao.

However, unprecedented negative news such as founder Kim Bum-soo being arrested on charges of stock price manipulation and the stock price plummeting has led to a series of unfortunate events, turning it into a ‘winner’s curse.’ 

1. [+976, -37] If Lee Soo-man really left SM, would it really be SM? After the non-compete period ends, Lee Soo-man will probably establish a new entertainment company and take away all of SM’s key personnel. A company like that shouldn’t have been acquired but those idiot Kakao executives..
2. [+255, -23] As expected, Soo Man-ong has excellent sense ㅋㅋ
3. [+251, -4] Kakao should’ve just managed Katalk well.. they crossed the line and got arrested and it’s affiliates started to suffer one by one. Even Kakao has its limits.
4. [+162, -5] Can-do-everything Soo-man ㅋ
5. [+72, -7] Align Partners harrassed major shareholders, stabbed them from here to there and sent an industry giant to the wrong end.. The net that could’ve saved them to the end has disappeared so they’re keeping silent, the stock price and management is completely shattered
6. [+39, -3] Just because he received a performance bonus they claimed that the founder who brought up the company from scratch was exploiting it and sucking it all up ㅋㅋㅋ.  The executives who crawled into a fully-built building as if they contributed a brick to the foundation are disgusting ㅋㅋㅋㅋ.  This is why private equity funds and professional executives are never the answerㅋㅋㅋ. They’re just trying to take over the company in any way possible, in their minds there is nothing else they care about. 
7. [+38, -0] SM is an abbreviation of Lee Soo-man’s name.. if Lee Soo-man isn’t there, is it really SMㅋㅋ
8. [+33, -0] Where is Lee Soo-man’s nephew that kept begging him but then criticized him when he sold SM? 
9. [+29, -1] This was a company who’s brand and logo only grew because of Lee Soo-man’s abilities. What abilities does Kakao have to think they can exclude Lee Soo-man and still grow it? The original company management also has zero sense.. ugh
10. [+21, -1] No matter how you look at it, SM was SM and much better under it’s old owner ~
11. [+15, -2] Isn’t Lee Soo-man a K-pop legend? Looks like they were going for retribution trying to kick him out. 
12. [+18, -9] The management team that stabbed Lee Soo-man are the problematic ones..