Three Asian tech titans and several other players are striving to take over Nexon, a very successful and highly profitable game developer and publisher, which is up for sale.
The three are Tencent from China and Kakao and Netmarble from Korea. A few private equity funds such as KKR, MBK Partners and Bain Capital have also shown interest.
On top of these, the three US big names of Amazon, Comcast and Electronic Arts have thrown their hats by taking part in the preliminary bid to buy Nexon on Feb. 27, 2019, according to a local newspaper.
Originally, one of the three Asian IT companies was expected to snap up Nexon at a price in the neighborhood of $10 billion. But the advent of many other participants is likely to raise the price.
Observers point out, however, that price may not be the top criterion in consideration of Nexon owner Kim Jong-ju, who co-founded the company in 1994.
“Kim would want to avoid the criticism that he is only trying to line his pockets by selling off Nexon’s precious intellectual properties on games to overseas competitors,” said a source familiar with the issue.
“Plus, he cares a lot about Nexon employees. If massive layoffs are expected, he would think again on the potential candidates to take over his firm.”
In that sense, Seoul-based mobile giant Kakao would be a most viable contender. Although headquartered in Seoul, game developer Netmarble and private equity fund MBK Partners may cause Nexon’s Kim to worry about the job security of Nexon workers.
To claim the upper hand, Netmarble vowed to found a consortium with just Korean funds. The company and MBK Partners may promise to keep the Nexon workforce intact for a certain period of time, watchers have been pointing out.
Other scenarios are also on the lips of analysts such as one where China’s Tencent or U.S. firms take part in a Kakao consortium. Tencent rakes in big profits by publishing Nexon games in China; while Amazon, Comcast and EA are vying to underpin their game businesses.
Whoever takes over Nexon, it will mark the biggest merger and acquisition (M&A) involving a Korean company.
Samsung Electronics acquired U.S. automotive part supplier Harman International Industries for $8 billion in 2017, which was the biggest ever M&A here, followed by the $6.5 billion Homeplus purchase by MBK Partners in 2015.
Nexon was launched in 1994 based in Seoul. In 2005, it moved its head office to Tokyo but is widely seen as being a Korean company. Its sales topped $2.2 billion last year and net profit was around $1 billion.
It has come up with such legendary games as “Nexus: The Kingdom of the Winds,” “ KartRider,” “MapleStory” and “Dungeon & Fighter.”