HYBE sells SM shares to Tencent Music, exiting its 9.38 percent stake in a deal worth about 200 billion won. The transaction, announced Tuesday, marks HYBE’s full divestment from SM Entertainment following last year’s failed takeover battle. Tencent Music, a subsidiary of China’s tech giant Tencent, will now become SM’s second-largest effective shareholder. Kakao and Kakao Entertainment still lead with a combined 41.5 percent stake in the K-pop agency. HYBE sells SM shares to Tencent Music in a move expected to reshape industry power dynamics.
According to HYBE’s regulatory filing, the company will sell 2,212,237 shares at 110,000 won each in a block trade. The deal totals approximately 243.3 billion won and will close after the market wraps on Friday. HYBE described the sale as part of a “choice and concentration strategy” to secure capital for future growth. The firm stressed its intent to focus on core assets and long-term expansion. HYBE sells SM shares to Tencent Music while signaling a shift in its investment direction.
Tencent Music’s new stake adds to its growing portfolio in the Korean music industry. The company already holds minor shares in other major K-pop agencies, including 4.3 percent in YG Entertainment and 4.61 percent in Kakao Entertainment. It has also distributed music for HYBE and Cube Entertainment through strategic partnerships. This latest acquisition expands Tencent Music’s influence over SM’s intellectual property and artist portfolio. Industry watchers say HYBE sells SM shares to Tencent Music as Tencent positions itself deeper within K-pop’s infrastructure.
SM Entertainment has long pioneered K-pop’s expansion into China, and insiders expect this deal to reignite cross-border collaboration. A company spokesperson confirmed that SM plans to “work more closely with Tencent Music” in upcoming projects. Analysts believe the partnership will unlock new opportunities in digital content, streaming, and artist promotion. With Tencent’s strong distribution network, SM may benefit from broader access to the Chinese market. The acquisition also aligns with Tencent’s aim to globalize its music business through K-pop.
The sale follows HYBE’s failed bid to control SM’s management in 2023, which Kakao ultimately won. While HYBE has since turned toward developing global talent and multimedia ventures, this divestment frees capital for future acquisitions. Meanwhile, SM gains a strategic investor with strong regional reach and tech capabilities. Tencent Music’s growing stakes reflect its ambition to dominate Asia’s digital music space. As HYBE sells SM shares to Tencent Music, both companies now gear up for the next stage of industry evolution.
