This is not the first time artists received shares of HYBE. When the company went public last October on the Korean stock exchange, the seven members of BTS each obtained shares valued at $ 8 million. But sources say that heritage is being rewardeded to Ithacain artists is coming out of Braun’s stake.
HYBE, the company behind the powerful K-pop group BTS, said on Friday (April 2) that it would pay $ 1.05 billion in cash and shares to acquire Ithaca Holdings, in motion designed to help the Korean company establish a strong presence in the United States in music and entertainment and, at the same time, raise its profile for American financial investors. According to the terms of the deal, which should be closed in about a month,Braun will join the board of HYBE and Borchetta will remain CEO of the Big Machine Label Group.
Big H home businessthis Trainingin management company and record companies with entertainment interests from Ithaca, which include the Big Machine label, the project management company SB and their interests in films and games through Mythos Studios and 100 Thieves Gaming.
Since going public in October, HYBE has leveraged BTS’s global dominance to make a series of smaller label acquisitions, joint ventures and strategic partnerships with South Korean and American labels, including Universal Music Group. The agreements have brought the company closer to the United States market and to the founder and CEO Bang Si-HyukHYBE’s goal is to transform HYBE into an international entertainment conglomerate.
In February, HYBE and Universal announced that the Korean company create a joint record company with Geffen Records and co-produced a american idol-as a show in search of the next global K-pop boy band. The new label will be managed in Los Angeles, where HYBE plans to open a newly expanded we office later this year.
For HYBE, Ithaca Holdings will ease pressure on the company to diversify its list of artists beyond BTS, which pulled 97% of the company’s sales in 2019, especially with mandatory military service for the group’s oldest members still hovering in two or three years. .
O Ithaca Holdings deal was announced after the closing of the Korean Stock Exchange Friday, in which HYBE shares – which still trade under Big Hit Entertainment – closed at KRW 243,000 ($ 214.97) per share, giving the company a market capitalization of 8.5 trillion KRW ($ 7.27 billion), slightly below the 8.7 trillion KRW valuation on its first day of trading. negotiation in October 15th.
In addition to paying with Big To knock shares, HYBE is using at least $ 120 million in debt for financand the deal, according to a HYBE file. The shares probably come with a blackout period, which means that recipients cannot trade them until a specified date.
Financial music executives said they were surprised by the assessment of Ithaca, especially after Braun and The Ithaca funder, the Carlyle Group, sold the crown jewel of Big Machine labels – Taylor Swift’s Catalog – to Shamrock Holdings for an estimated $ 300 million last November. That was 16 months later They bought Big Machine.
At the Big Machine acquisition, sources say that Ithaca acquired 80% of the company in an agreement that gave Big Machine about a $ 380 million valuation, leaving Borchetta and possibly some of his investors with a 20% stake that has apparently been converted into shares of Ithaca.
In addition to the Swift catalog, Big Machine record companies also go bring HYBE Florida Georgia Line music, Carly Pearce, Lady A, Jennifer Nettles, Rascal Flatts, Sugar Land, Sheryl Crow, Thomas Rhett, Tim McGraw, Brantley Gilbert and the Eli Young Band.
Previously, Advertising panel estimated that Big Machine had an average revenue of about $ 100 million in the 2015-18 period, with almost $ 40 million in earnings before interest, taxes, depreciation and amortization. But as the Swift catalog generated a large part of the revenue, it was also responsible for an exaggerated profit–margin contribution – almost three quarters of overall EBITDA, Advertising panel calculated.
sBorchetta has since sold the Big Machine to Ithaca, Pthe prices of musical assets have increased considerably, with Universal Music Group achieving a multiple of 30 times the EBITDA of its business with Tencent Musical entertainment. UMG is expecting an even larger multiple of its planned stock offering later this year.
Considering these multiples, Advertising panel projected that, at the upper limit, this could mean a valuation of $ 950 million for Big Machine alone. But that was before Ithaca sold the Swift catalog to Shamrock Holdings for about $ 300 million. Without the Swift catalog, Big Machine worth half – anywhere from $ 300 million to $ 650 million. This means that the rest of Ithaca’s holdings in technology, films and games contributed a significant part of Ithaca’s assessment.
Regardless, the Carlyle Group can emerge as the biggest winner in the to deal. Ithaca Holdings and HYBE said Friday that Carlyle will sell its significant minority stake in Ithaca, after initially investing in the company in 2017.
ANDven before the Swift catalog was sold, sources suggest that Carlyle was the sole beneficiary of the $ 300 million that Shamrock paid for the Swift catalog.
With Big Machine and SB Holdings, HYBE will significantly improve your Participation in the USA. And the combined management and label lists of Bieber, BTS and Grande go give HYBE more firepower in the entertainment lifestyle market.
O business could also means that HYBE is inheriting a potential Swift headache. The pop star expressed your displeasure last year on discovering that Braun owned his catalog through the acquisition of the Big Machine. She said she wanted, but was never offered, a chance to buy her catalog back. Subsequently, she denounced the business and everyone involved in it. It continues to have its own publication.