Tencent Acquires 9.7% Stake in SM Entertainment, Becomes Second-Largest Shareholder

Tencent Music Entertainment Group is acquiring nearly a 10% stake in South Korean K-pop agency SM Entertainment from Hybe, making Tencent the second-largest shareholder behind Kakao's combined 41.5% holding. The $177 million deal marks the end of a contentious ownership battle between Hybe and Kakao over SM Entertainment and reflects Hybe's strategy to streamline its portfolio and focus on core business areas. Tencent's investment is seen as a strategic move to strengthen SM Entertainment's position in China amid expectations that Beijing may soon lift its nearly decade-long unofficial ban on K-pop performances, potentially unlocking significant growth opportunities. Analysts view this as a positive development that could remove overhang risks on SM shares and support the company's expansion in the Chinese market. The transaction also signals improving cultural and economic ties between South Korea and China, with Tencent's backing potentially facilitating new collaborations in the Asian entertainment industry. Overall, the deal highlights a shifting landscape in K-pop as geopolitical conditions evolve and companies seek to capitalize on emerging market openings.