HYBE Continuing to Consider Acquisition of SM Stake
The author is an analyst of KB Securities. She can be reached at leesunhwa@kbfg.com. -- Ed.
HYBE America acquires QC Media Holdings
ㅡ HYBE America’s QCM HoldCo LLC announced the acquisition of QC Media Holdings stock.
ㅡ The acquisition will be financed with the issuance of new shares worth KRW339.0bn (270mn shares at KRW1,246 or USD1.00 per share); KRW314.0bn of the raised funds will be used to acquire QC Media Holdings and the remaining KRW25.1bn to fund operations.
ㅡ HYBE will purchase all 270mn HYBE America shares. Also, it will issue KRW62.8bn in new shares to QC Media Holdings CEO Pierre Thomas and COO Kevin Lee to reinforce the partnership between the two companies.
HYBE to gain stronger presence in U.S. music market
ㅡ Founded in 2013, Quality Control Music is a hip hop label with several popular artists under management, including Lil Baby, Migos (Quavo, Offset) and Lil Yachty. HYBE America’s acquisition of QCM Media Holdings will establish itself as a multi-label powerhouse, adding to its pop label SB Projects and country label Big Machine.
ㅡ Through BigHit Universal (51% stake; 49% stake held by UMG), HYBE holds the HYBE x Geffen Global Girl Group Audition as part of its mission to go beyond the boundaries of K-pop and develop new global artists across various genres.
Artist pipeline reinforcement, increase in Weverse IP value
ㅡ Weverse hosts 78 artists/groups and boasts 7mn MAU. HYBE plans to add a communication channel to Weverse in March-April. The channel should reinforce related artist IPs.
ㅡ HYBE operates Phoning, a communication channel dedicated to NewJeans fans. The service charges a monthly subscription fee of KRW9,900 (or annual fee of KRW99,000). We expect Weverse’s new communication channel to charge a similar subscription fee.
HYBE continuing to consider acquisition of SM stake
ㅡ On Feb 9, the Korea Exchange requested disclosure of information regarding a Feb 8 report that HYBE would tender SM Entertainment shares to SM Entertainment chief producer Lee Soo-man. HYBE replied that it was considering the acquisition of SM shares, but was yet to make a decision at the time of disclosure.