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Korea’s top gaming firm up for sale

Korea’s largest gaming company Nexon is up for grab as its founder Kim Jung-ju strives to sell off a 98.64-percent stake in NXC, the holding company that has 48 percent of Nexon.

Late last month, five outfits threw their hat into the ring including two info-tech companies and three private equity funds. They are Netmarble, Kakao, MBK Partners, KKR, and Bain Capital.

Now the question is how much Nexon, the maker of Dungeon & Fighter, would be. The consensus is that its price would be somewhere between $8.5 billion and $13 billion.

In line with Kim’s wish, the sale’s lead managers of Deutsche Bank and Morgan Stanley seem to think that the stake up for sale is valued up to $13 billion.

First of all, they claim that Nexon is a highly profitable company as its annual profit nears $1 billion and its cash reserves also amount to some $4 billion.

In addition, NXC has other good companies under its wing including Stokke, a Norwegian manufacturer of children’s furniture and accessories, and Cobit, a cryptocurrency exchange.

It is not certain whether NXC subsidiaries will be sold en bloc or separately. If all the NXC units are sold at the same time, observers point out that Kim would want to get $13 billion.

But potential buyers appear not to shell out more than $8 billion to acquire Nexon, which also published such games as MapleStory, and FIFA Online.

Their rationale: As Nexon’s market capitalization is about $13.5 billion, the market value of NXC’s stake is $6.5 billion. Hence, the final price should be around $8.5 billion even after adding the control premium.

It remains to be seen who will become the preferred bidder. Watchers expect that strategic investors like Netmarble and Kakao are strong contenders than financial ones.

Deutsche Bank and Morgan Stanley are expected to negotiate with potential buyers to the last minute to decide the price of Korea’s largest game publisher.

 

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