The planned sale of the parent company of South Korea’s biggest online gaming firm Nexon Co. Ltd., was abruptly cancelled after it failed to narrow the valuation gap with financial investors in the lack of strategic bidders, according to sources familiar with the situation on June 26.
The value of a 98.64% stake up for sale in NXC Corp. was estimated at over 10 trillion won ($9 billion), in what could have been the largest M&A transaction in South Korea.
NXC owns 47.98% of Nexon which has a market value of 15 trillion won on the Tokyo stock exchange.
Founder of Nexon, Jungju Kim, had sought to sell the majority stake held by himself, his wife and others in the holding company since early this year.
A source in the game industry said that Kim, also CEO of NXC, had expressed his willingness to quit the game business because of heavy regulations and after he was embroiled in a headline-grabbing bribery scandal for about two years.
NXC had drawn binding bids from private equity firms including KKR, Bain Capital and Seoul-based MBK Partners and its domestic rivals Kakao Corp and Netmarble Corp. by the twice-extended deadline of May 24.
Entertainment giant The Walt Disney, which CEO Kim had tapped to sell his company, has not participated in the bidding.
Bain Capital and Kakao were dropped out of the race after they offered low bids, the sources added.
“CEO Kim didn’t like the shortlisted bidders composed of Netmarble and PEF companies,” a source with deep knowledge of the matter told the Korean Investors.
Sale managers UBS and Deutsche Bank will soon notify the final bidders of Kim’s decision to call off the sale.
DOUBT ABOUT FINANCING CAPABILITY
The only strategic bidder Netmarble failed to convince the seller of its financing capability.
KKR and MBK had not bid up amid market rumors that Netmarble was considering issuing global shares to fund the possible acquisition of NXC. The speculation added to uncertainty about Netmarble’s ability to close a deal of billions of dollars.
Meanwhile, MBK got the backing of the National Pension Service which decided on June 25 to invest 700 billion won in NXC, in case MBK acquires the South Korean gaming company.
“We can’t rule out the possibility that NXC would be put up for sale again, but it seems unlikely to happen for some time,” said another source, without elaborating further.
The Korean company’s popular games include Sudden Attack, Dungeon Fighter and Maple Story.
By Donghun Lee and Hugh YH Jeong
<Edited by Yeonhee Kim>