SM attempts to persuade the minority owners that “HYBE will provide all the good songs and choreography to their artists first.”

The current management of SM Entertainment, which is fighting for management rights with competitor HYBE, sent a letter to minority shareholders asking for support ahead of the shareholders’ meeting scheduled for the end of this month, saying, “HYBE’s board of directors will, of course, give new business opportunities to HYBE (not SM).”

SM recently addressed a letter titled ‘To the shareholders of SM Entertainment Co., Ltd.’ to minority shareholders, according to a March 1 report.

The letter envelope promises “an impartial board of directors for all shareholders, not individual stockholders,” as well as “a dividend of 1,200 KRW per share.” Additionally, “(SM) Recommendation of the board of directors” is circled, and “Former major shareholder, Lee Soo Man’s suggestion,” is marked with an X.

“This year’s shareholders’ meeting is the last opportunity to totally settle SM’s governance difficulties that have been going on for the past decade and increase its corporate value to the next level as an entertainment company with the best talent pool in Korea,” the current management added.

To persuade the shareholders, SM included a separate question and answer (Q&A) sheet.

In response to one query, “Wouldn’t it be better if SM was acquired by HYBE, which is larger and in the same industry?” “Since HYBE has a larger investment in these affiliate organizations, good trainees, good songs, good choreographers, and concert preparation will be allocated to Big Hit (BTS’ agency), Pledis (Seventeen’s agency), ADOR (NewJeans’ agency), and Source Music (LE SSERAFIM’s agency).”

“If HYBE owns only up to 40% of SM shares and the remaining 60% is held by general shareholders, conflicts of interest will inevitably arise between SM shareholders and HYBE shareholders,” SM continued, adding that “HYBE is the industry’s largest competitor competing for first and second place with SM.”

They also explained why they supported Kakao’s capital expansion and issuance of convertible bonds at 90,000 KRW while opposing HYBE’s 120,000 KRW tender offer.

SM elaborated, “The paid-in capital increase and convertible bond issued by Kakao are for strategic engagement with us.

There is no management right because the issue volume is just 9% of the total, and because the business sector does not intersect with ours, we may expect significant synergy to boost our shareholder value.”