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By Jun Ji-hye
Netmarble, Kakao and global private equity funds (PEFs) have joined the preliminary bid to take over control of Nexon, the nation's leading game company, according to industry sources Friday.
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| Headquarters of Nexon in Pangyo, Gyeonggi Province / Courtesy of Nexon |
Nexon founder Kim Jung-ju, current CEO of Nexon's holding company NXC, previously put NXC's 98.64 percent stake owned by him, his wife and his private company on the market. NXC has ownership in Nexon that is headquartered in Japan, and the Japanese entity controls Nexon Korea.
The acquisition price is estimated at more than 10 trillion won ($8.9 billion), the largest-ever merger and acquisition (M&A) deal in the nation.
Sources said several alliances are expected to be formed between entertainment firms and PEFs in the course of the bidding, considering the scale of the mega deal.
Netmable has officially expressed its intention to join the race, saying the firm believes the tangible and intangible values of Nexon are important assets for the country.
"Netmarble decided to participate in the takeover by forming a consortium based on domestic capital," a Netmarble official said.
Kakao, the nation's largest mobile messenger operator, and global PEFs including Bain Capital and KKR also reportedly participated in the preliminary bid.
A Kakao official said, "There is nothing to confirm."
Among bidders, Netmarble is cited as a frontrunner as it is expected to form a consortium with MBK Partners, the nation's largest PEF with ample cash reserves.
Kim Dong-hee, an analyst from Meritz Securities, said Netmarble's corporate value will be upgraded if it succeeds in taking over Nexon.
"The takeover of Nexon will raise competitiveness of Netmarble's intellectual property and game development capability," Kim said.
Kakao, which has released no notable games so far, is also expected to enjoy synergy through the takeover of Nexon as it will enable Kakao to utilize Nexon's intellectual property, according to Lee Min-ah, an analyst from KTB Investment & Securities.
But analysts said Kakao may be falling behind Netmarble in terms of funding power.
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| Nexon founder Kim Jung-ju |
Sources said various variables could affect the mega deal. Among them, the move by Tencent is cited as the biggest variable, though the firm is expected not to participate directly in the bid.
The Chinese tech giant is the second-largest shareholder of Kakao and the third-largest shareholder of Netmarble, meaning it can have a huge influence on the two Korean firms.
"Who will be the winner in the M&A war may depend on whom Tencent will side with," a source said.
Another variable is an ongoing investigation by prosecutors against Nexon founder Kim over his alleged evasion of about 1.5 trillion won in taxes. The risk of possible legal trouble could burden global investors, according to sources.
Eyes are also on the movement of a Nexon union as the union members have claimed the M&A issue has threatened their job security.
Any collective actions that could be carried out by the union can be another risk for bidders in the M&A war.
