SM Entertainment, a leading K-pop music corporation, has purchased an extra 11.4% share in DearU, the firm responsible for developing an artist-fan communication application.
In a disclosure filed on Friday, SM Entertainment revealed that they acquired 2,711,351 shares of DearU at a price of 50,000 won ($34) per share, totaling 135.6 billion won ($9.2 million). This move saw the prominent South Korean entertainment corporation obtain almost 2 million shares from another leading K-pop firm, JYP Entertainment. Additional shares were sourced from DearU’s CEO and several high-ranking officials within the organization.
In total, SM Entertainment has acquired a 45.1% share in DearU. Starting from the second quarter, DearU’s profits will be included in SM Entertainment’s combined financial statements. This acquisition is anticipated to boost SM Entertainment’s profitability due to DearU’s strong showing, which yielded an operational profit of 25.4 billion won on revenues of 74.8 billion won for the previous year.
Moreover, SM Entertainment expects increased collaboration between its international entertainment operations and DearU’s fandom platform, Bubble. This chat-focused application allows artists to engage in direct, individual talks with their supporters. Additionally, SM intends to grow its intellectual property business through enhanced support for fan engagement platforms.
Introduced in February 2020, Bubble operates as a premium service where enthusiasts pay for a monthly membership to interact with their favorite musicians. In collaboration with Tencent Music Entertainment—the leading music platform in China—DearU plans to introduce Bubble into the Chinese market during the initial part of this year.
The anticipated launch is projected to generate tens of billions more won for the South Korean firm. Consequently, this surge in income should contribute significantly to boosting SM Entertainment’s overall yearly earnings through increased consolidation revenues.
Korea Investment & Securities Co. has adjusted the target price for SM Entertainment stocks due to expectations of enhanced company valuation, setting it at 130,000 won from the earlier figure of 110,000 won. On Monday, shares of SM Entertainment rose almost 2%, surpassing 107,000 won.
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