HYBE, the agency of K-pop acts BTS, Seventeen, TXT and ENHYPEN, has denied SM Entertainment management’s accusations that its entry into the company was a “hostile takeover.”

The company’s position was revealed during a conference call by HYBE’s CEO Park Jiwon and Chief Financial Officer (CFO) Lee Kyung-Jun.

On Feb. 21, HYBE revealed its earnings, showing that the company’s sales surged to 1.77 trillion won (about $1.37 billion) for the whole year of 2022, an increase of 41.57 percent compared to 1.25 trillion won (about $967 million) recorded in 2021.

HYBE’s operating profit for 2022 grew to 237.7 billion won ($183 million), up by 24.97 percent from 190.2 billion won ($146 million) posted in 2021.

On Feb. 9, HYBE bought 3,523,420 common stocks of SM Entertainment owned by Lee Soo-man Lee, the largest shareholder of SM Entertainment, for 422.8 billion won ($334 million). This gave HYBE a 14.8 percent stake in SM Entertainment to become the largest shareholder of the company. The expected acquisition date is on March 6.

The management of SM Entertainment, which has EXO, NCT, Aespa and Super Junior among its artists, has opposed HYBE’s entry into the company.

It uploaded a video on Feb. 20 on YouTube with the title “The reason why SM is against HYBE's hostile takeover” with Chief Financial Officer (CFO) Cheol Hyuk Jang explaining the reason.

“This is clearly a ‘hostile takeover attempt’ that has not been consulted with the current management and board. Through this attempt for hostile takeover, HYBE seems to plan to exercise the management control by dominating the board of directors,” said SM Entertainment’s Cheol Hyuk Jang.

During HYBE’s conference call, Park Ji-won denied this, saying the company’s entry into SM Entertainment is not a “hostile M&A .”

“We are not hostile to any party and we acquired the stake based on a mutual agreement with the majority shareholder . We also offered a tender offer to the minority shareholders under the same conditions,” said the HYBE CEO.

He added, “We have no intention of being hostile to any member of the management. However, I would also like to mention that the management of the company should represent interests of all the shareholders including HYBE, which is now a shareholder of SM Entertainment. So I believe that the SM Entertainment’s management should protect interests of all shareholders including us. “

Park Ji-won also said HYBE will also consider any business proposal from Kakao if this will benefit SM Entertainment under the assumption that it will not participate in the “business management.”

About the claim that HYBE’s entry will lower the value of SM Entertainment, he said, “I do not believe so because as pretty much everyone knows, there will be a lot of synergies created when HYBE and SM Entertainment join hands.”

“For instance, in the North American market, BTS has made a big success and we have the local network and knowhow that has been accumulated through Ithaca Holdings. So we can support SM Entertainment artists to expand their career in the North American market,” he explained.

Park Ji-won added, “And on the other hand, SM Entertainment has absolute, superb infrastructure in China and also in the Southeast Asian market. This can be utilized for HYBE artists to expand into these markets.”