January 31, 2019 / 4:04 AM / 4 months ago

South Korea's Netmarble to form consortium for Nexon holding company bid

SEOUL (Reuters) - South Korean gaming firm Netmarble said it will form a consortium to bid for a controlling stake in Nexon’s holding company, the latest to show interest in a deal that could be worth about $9 billion after Kakao.

FILE PHOTO: The logo of Netmarble Games is seen at its headquarters in Seoul, South Korea, March 25, 2016. REUTERS/Kim Hong-Ji

Both Netmarble Corp and Kakao Corp are backed by Tencent Holdings Ltd and, according to sources, the Chinese tech giant too is considering a bid.

Kim Jung-ju, founder of Nexon, the country’s biggest gaming company, plans to sell a 98.64 percent stake in NXC Corp, held by himself and related parties including his wife, the Korea Economic Daily newspaper has reported.

Selling the stake to overseas companies would weaken the competitiveness of the industry in the country, said Netmarble, which controls over a quarter of South Korea’s mobile gaming market. Tencent has a 17.66 percent stake in Netmarble.

“We believe the tangible and intangible values of Nexon are important assets to Korea,” Netmarble said in a statement, adding its consortium will mainly include domestic firms.

Netmarble also said it had been considering buying Nexon for two months and decided to participate in the bid a month ago.

Nexon shares ended up 0.7 percent on Thursday, after earlier rising more than 3 percent after Netmarble’s announcement, in a flat wider market.

South Korea’s top chat app operator Kakao, in which Tencent holds a 6.7 percent stake, said last week it was reviewing a bid for Nexon’s holding firm.

Spokespersons at Kakao and Netmarble declined to comment on whether the pair would join forces for a bid.

A 98.64 percent stake in NXC would be worth between 8 trillion and 10 trillion won ($7.1 billion and $8.9 billion), according to South Korean local media reports.

Founded in 1994, Nexon has developed more than 80 live games in over 190 countries, including IP-franchise hits such as MapleStory, Dungeon & Fighter, Sudden Attack and KartRider.

Tencent owns the exclusive license to operate Dungeon & Fighter in China. The world’s largest gaming company by revenue was hit hard by a freeze on approvals for new titles in China last year, which wiped billions of dollars off its market value.

China has resumed handing out approvals since December and some Tencent titles have since been green lit, although the firm is still waiting for a ruling on its blockbuster PlayerUnknown’s Battlegrounds.

Reporting by Hyunjoo Jin; Editing by Himani Sarkar

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