Korean game major Netmarble also enters race over Nexon

2019.01.31 15:51:58 | 2019.01.31 16:18:50

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Online game giant Netmarble Corp. has joined the bid for its bigger rival Nexon Co., becoming the second Korean company throwing down the gauntlet to bigger global contenders such as Chinese Tencent, global private equity funds KKR, TPG and Carlyle Group.

“The decision to join the bid was made a month ago,” said an unnamed official from Netmarble who declined to be named because its bidding has not been confirmed official. “We worried that foreign ownership of Nexon holding important tangible and intangible value would seriously hurt the ecosystem and competitiveness of the Korean gaming industry.”

Netmarble plans to take part in the deal by setting up a consortium with local investors.

Shares of Netmarble closed Thursday 2.7 percent down at 107,000 won ($96.16).

Netmarble’s move was reported just a day after Korea’s leading mobile messenger operator Kakao Corp. officially confirmed its decision to pursue the blockbuster buyout deal estimated to fetch at least 10 trillion won.

The deal has already attracted global big-name contenders including China’s Tencent, the world’s largest game publisher, and U.S. funds KKR, TPG and Carlyle after Nexon founder and chief executive Kim Jung-ju earlier this month put up for sale the controlling 98.64 percent stake in Nexon’s holding firm NXC Corp. held by himself, his wife and related parties.

U.S. game company Electronics Arts Inc. and Walt Disney Co. have also shown interest.

As foreign companies have rushed to win the race, fears of foreign capital dominating Korea’s gaming industry have brought the domestic front together. So far Netmarble and Kakao have come forward, and two local investment banks Korea Investment Holdings and Mirae Asset Financial Group are mulling to back a strategic investor.

With the deal gaining heat, NH Investment and Securities Co. released a report on Thursday, saying that if a Korean firm purchases Nexon, it would create a huge synergy effect considering Nexon’s significant market presence at home and abroad and impact on the Korean gaming industry. The buyer of Nexon would be able to use Nexon’s intellectual properties and expand business to a wider global market.

For Netmarble, the possible acquisition would significantly boost its business as the two game firms run various genres of game from casual to hard core.

However, Nexon’s hefty price tag of at least 10 trillion won would become the biggest hurdle for local contestants. As of the end of third quarter last year, Netmarble and Kakao held a respective of 2.8 trillion won and 2.3 trillion won worth cashable and available-for-sale assets.

By Lee Yong-ik and Choi Mira

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