Could Tencent buy controlling stake in Nexon, the South Korean gaming giant that makes Dungeon & Fighter and MapleStory?
- It remains to be seen whether Tencent will take the plunge, given China’s gaming industry has been hammered over the past year with regulators freezing approvals for new games
The founder of Nexon, South Korea’s largest video game company, has fanned speculation he will sell his controlling stake in the company, which produces hugely popular action role-playing online games Dungeon & Fighter and MapleStory.
Kim Jung-ju is considering new business opportunities, according to a company spokesperson, as Chinese and US firms emerge as possible buyers of his stake in Nexon.
“I’m considering various ways that would help make Nexon a globally competitive company all the more,” Kim said in a statement published on Saturday. “I’ve been always in agony, searching for the best ways for the company’s growth and for that purpose, what I should do ... I am more determined than ever to plunge into new challenges, without getting complacent.”
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Shares of the company’s subsidiaries surged for the three consecutive business days, with Nexon GT trading 19 per cent higher and Net Games soaring 9.5 per cent on Monday.
Kim Jung-ju has reportedly sent letters through Deutsche Bank New York branch to Chinese online game behemoth Tencent and some private equity funds, expressing his intention to sell most of the 48 per cent stake worth 6 trillion won (US$5.4 billion) he and his wife own.
I’ve been always in agony, searching for the best ways for the company’s growth and for that purpose, what I should do
Tencent publishes Dungeon & Fighter in China and Nexon is heavily dependent on the Chinese market. Tencent may therefore have an advantage over other potential buyers, including US game publisher Electronic Arts.
Nexon’s 2018 fourth-quarter sales have been estimated to be somewhere between 45-50 billion yen (US$414-460 million), down 5-13 per cent from the previous year, a Nexon spokesperson said. Net profit for the September-December period was forecast to be 7.6-9.6 billion yen, a turnaround from the net loss of 2.2 billion yen the year before.
However, it remains to be seen whether Tencent will take the plunge, given China’s gaming industry has been hammered over the past year with regulators freezing approvals for new games.
A Tencent spokesman declined to comment.
Kim founded Nexon in 1994 after abandoning a master’s degree in computer engineering at the Korea Advanced Institute of Science and Technology. He launched the popular online role-playing game Nexus: Kingdom of the Winds.
Nexon has grown to be a global company, producing more than 90 game titles played by more than 1.4 billion users.
