By Kwanwoo Jun


HYBE Co., manager of South Korean boy band BTS and other global K-pop artists, said Friday that it will buy a 14.8% stake in local peer SM Entertainment Co., sending both stocks sharply higher in early trade.

HYBE plans to buy 3.52 million shares from SM Entertainment's founder and largest shareholder, Lee Soo-man, for 422.81 billion won ($334.3 million) by March 6, it said in a regulatory filing.

The deal values SM Entertainment's shares at KRW120,000 each, a 22% premium to Thursday's closing price.

HYBE said the planned stake purchase, which would make it SM Entertainment's largest shareholder, aims to enhance its competitiveness and leadership in the expanding K-pop market. Local South Korean media have reported that HYBE could seek to increase its stake to 40% in the future.

Shares in HYBE and SM Entertainment jumped as much as 10% and 19%, respectively, Friday morning. The country's main bourse Kospi and second-tier Kosdaq market, where SM Entertainment is listed, were down 1.0% and 1.4%, respectively.

The deal comes days after local mobile internet-platform giant Kakao Corp. said it was also planning to take a stake in SM Entertainment by March 6. Kakao's purchase of a 9.05% stake for KRW217 billion would make it the second-largest shareholder in the entertainment company.

Kakao, which has its own entertainment and media-content affiliates, said Friday that it plans to expand joint projects with SM Entertainment.


Write to Kwanwoo Jun at kwanwoo.jun@wsj.com


(END) Dow Jones Newswires

02-09-23 2125ET