In the merger between record label BTS HYBE and Scooter Braun’s Ithaca Holdings, Braun’s SB Projects (SBP) client list – including Justin Bieber, Ariana Grande, J Balvin and Demi Lovato – are expected to become significant shareholders in a capital increase aimed at strengthening the bond between the two companies, according to a Korean regulatory document.
A total of 863,209 new shares were issued, at $ 186 per share, for a total amount of $ 160.5 million. Of these shares, 462,380 were allocated to Braun himself, and 166,537 were allocated to Scott Borchetta, CEO of the Big Machine Label Group, which Ithaca acquired in 2018. A $ 50 million purchase price commitment was also split between acts and employees who has been with Scooter Braun since starting SBP in 2007. Among them, Justin Bieber and Ariana Grande received 53,557 each – translating to around $ 10 million each – while J Balvin received 21,423 shares. Demi Lovato received 5,355. Smaller slices of the pie were distributed to other artists on the label’s list, such as Carly Rae Jepsen and Asher Roth, who each received 535 shares, as well as producer Andrew Watt, Migos Quavo’s rapper, producer Tommy Brown, composer Jason “Poo Bear” Boyd and the members of the Florida Georgia Line, among others.
Braun’s business partner and SBP president Allison Kaye, meanwhile, received a hefty 26,778 shares – worth $ 5 million – and SBP general manager Jen McDaniels received 10,711 shares. Other members of the longtime team have also received mixed shared interests, including Scott Manson, James Shin, Jules Ferree and Shauna Nep.
“Scooter Braun, the largest shareholder in Ithaca Holdings, LLC, and Scott Borchetta, the largest shareholder, share 25% of the commercial profits received, while great artists and executives and employees (39) like Justin Bieber and Ariana Grande receive their share bonuses” , says a separate business-related document. “We plan to participate in the paid-in capital increase allocated to HYBE to 100% of HYBE (one-year protection deposit) and we hope to be more active as shareholders in the future.”
The cash and stock mega-business, a marriage of major entertainment labels, is valued at more than $ 1 billion. As part of the deal, Braun will become a board member of HYBE and Borchetta will continue as CEO of Big Machine.
The deal includes a range of services, including management, etiquette and publishing services for a list of music artists that, on the HYBE side, includes South Korean pop group BTS – one of the biggest global breakouts of the past five years. To this end, when combining the two companies, it is sensible that their respective strengths at opposite ends of the globe will complement – and help – both partners.
Sources familiar with the deal note that Braun, although allegedly in negotiations with former senior Disney executives Tom Staggs and Kevin Mayer, who are raising money for their own SPAC, has chosen to ally with a growing company that is in many of them companies like Braun. The partnership with a company such as HYBE, which operates in music, talent and similar content businesses, offers the various entities of Braun operational and strategic benefits in a global scenario.
As part of the $ 1 billion deal, HYBE had to technically acquire Ithaca and, in the process, buy the minority stake that private equity giant Carlyle Group held in Ithaca.
HYBE, formerly Big Hit Entertainment, went public in October 2020 with a $ 820 million offering that was South Korea’s largest in three years. Despite the initial hype, its stock has grown dramatically since then. After an increase in the commercial debut, stocks plunged in the last months of 2020, before staging a spectacular recovery in late January 2021, reaching a new high in mid-February of 52% above the IPO price – a capitalization of $ 6.4 billion market.
South Korea was also the fastest growing large music market in 2020, an increase of 44.8% year on year, according to an IFPI report in March. Although the country remains in sixth place on the chart of the top 10 global markets, if this rate continues, it will certainly enter the top 5 soon.
BTS had the best-selling album of 2020 with “Map of the Soul: 7”, according to the IFPI. Since its release in February 2020, it has topped the charts in the group’s home country, where the album broke South Korea’s all-time sales record, as well as in the world’s top five music markets (USA, Japan, UK United Kingdom, Germany, France).
In the photo (left): J Balvin, Ariana Grande, Justin Bieber