SM Entertainment Japan plans to have its consolidated subsidiary Everything Japan sell 360,000 DearU shares, a 1.52 per cent stake, to ultimate parent SM ENTERTAINMENT CO., LTD. on July 27. The price will be set from DearU’s closing price on that day’s Korean exchange session and settled in cash the same day, which means the headline economics are still floating. On current share-price and exchange-rate assumptions, the Japan-listed company says it expects to book about ¥747mn of special gain in its consolidated results for the year ending December 2026; the stake’s carrying value is ¥1.155bn.
| Item | Detail |
|---|---|
| Seller | Everything Japan, a consolidated subsidiary of SM Entertainment Japan |
| Asset | 360,000 DearU ordinary shares |
| Stake | 1.52% |
| Buyer | SM ENTERTAINMENT CO., LTD., the ultimate parent and controlling shareholder |
| Pricing method | July 27, 2026 closing price on the Korean exchange |
| Execution and settlement | Cash, planned for July 27, 2026 |
| Carrying value | ¥1.155bn |
| Estimated special gain | About ¥747mn, based on recent market price and exchange rate |
Why move the stake now
Everything Japan is no longer carrying on substantive business activity and is being prepared for liquidation. SM Entertainment Japan said the unit originally bought the DearU shares in April 2020, when DearU was developing a karaoke app for it and the investment helped the unit monitor DearU’s financial and operating condition. That project has ended, the company said, so the rationale for keeping the stake has effectively disappeared. It now wants the shares held directly by the Korean parent, which it says leads the group’s overseas strategy and the business base around DearU’s fan-communication platform.
Management also framed the timing as risk control. DearU’s operating performance is described as solid, but SM Entertainment Japan said the stock has been in a one-year correction as earlier enthusiasm over China expansion faded and the timing of that move remained uncertain. Using the published close for what the company describes as a large after-hours block trade lets the group sell without a discount and, in management’s telling, avoid both further downside and pressure on DearU’s quoted market price.
Fairness is being argued through process
Because the buyer is the controlling shareholder, the company sought an opinion letter from independent outside officers, one outside director and two outside auditors, saying the transaction would not disadvantage minority shareholders. The disclosure also says there are no overlapping directors between SM Entertainment Japan and SME, and that the price formula, independent review and board approval procedures are meant to support fairness in a related-party deal.
If the trade closes as planned, the cash is slated to come back to SM Entertainment Japan through Everything Japan’s liquidation process, including residual-asset distributions, and be redeployed into domestic core businesses such as artist management and balance-sheet strengthening. The next real datapoint is July 27: that is when the transfer price becomes final, and when investors find out whether the projected gain holds once the market close fixes the numbers.