이 기사는 2021년 08월 09일 08:02 thebell 에 표출된 기사입니다.

South Korea’s HYBE, home to global pop-star BTS, has recognized a 820 billion won ($717 million) goodwill linked to its takeover of US media group Ithaca Holdings, which made it vulnerable to potential impairment losses if it fails to achieve acquisition synergies.

The Seoul-based company recognized 960 billion won of intangible assets, 820 billion won of goodwill and 140 billion won of other intangible assets in connection with its acquisition of Ithaca Holdings, a HYBE official said during a second-quarter earnings call on Thursday.

Goodwill worth 820 billion won represents over 68% of the acquisition price. HYBE in April acquired 100% of the US company, which is behind artists like Justin Bieber and Ariana Grande, for $1.05 billion (about 1.2 trillion won).

Goodwill in accounting is an unidentifiable intangible asset calculated as the difference between the purchase price and the fair value of the net identifiable assets acquired. It accounts for intangible benefits from acquisitions, such as the acquired company’s reputation, management talent and control premium.

The value of Ithaca Holdings’ identifiable net assets is roughly estimated to be 380 billion won based on the purchase price and goodwill. This means HYBE recognized goodwill more than three times greater than Ithaca Holdings’ net assets value.

Goodwill is tested for impairment annually based on the business’s cash generating unit (CGU). If the carrying amount of the CGU exceeds the recoverable amount, an impairment loss should be recognized in the income statement, reducing the company’s net profit.

HYBE needs to maximize acquisition synergies in order to avoid writing down goodwill. The company plans to expand its entertainment business in the United States by using Ithaca Holdings’ knowhow and resources.

The two companies’ artists are also expected to create synergies in areas like platform services (such as HYBE’s fan platform Weverse), online concerts and secondary content distributions. HYBE has subsidiaries which organize online concerts and develop and distribute secondary content and products related to artists.

Ithaca Holdings’ famous artists joining Weverse will likely help significantly increase the platform’s monthly active users and average revenue per paying user. (Reporting by Choong-hee Won)