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    A035720   KR7035720002

KAKAO CORP.

(A035720)
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Nexon founder scraps what could have been $16 billion gaming deal - sources

07/09/2019 | 01:01am EDT
FILE PHOTO: Logos of Nexon are seen at its main office building in Seoul

SEOUL (Reuters) - Nexon Co founder Jungju Kim has abandoned plans to sell a controlling stake in its parent NXC, two sources with direct knowledge of the matter said, scuppering a potentially $16 billion (£12.8 billion) deal that would have been the gaming sector's biggest.

SEOUL (Reuters) - Nexon Co founder Jungju Kim has abandoned plans to sell a controlling stake in its parent NXC, two sources with direct knowledge of the matter said, scuppering a potentially $16 billion (£12.8 billion) deal that would have been the gaming sector's biggest.

Kim had been looking to sell the 98.6% stake he and his wife hold in NXC, which in turn owns 48% of Tokyo-listed Nexon.

Since it emerged in January, the sales plan has been dogged by funding challenges, the intricacies of Nexon's relationship with its biggest customer, China's Tencent Holdings, and protectionist South Korean sentiments.

"I am not picking a preferred bidder in light of market conditions and others," its billionaire founder said in an email sent to bidders via adviser Morgan Stanley, South Korean newspaper Joongang Ilbo reported.

The paper reported that Tencent or other tech giants had not joined the bidding, which contributed to the collapse of the deal.

Tencent's participation was seen as key to any deal, since it owns the exclusive China licence for Dungeon Fighter (DNF), Nexon's most successful game.

Sources said this year that whoever won the bidding for NXC would have to ensure Tencent was cooperative.

Bids from South Korean gaming company Kakao and private equity firm MBK Partners fell short of the seller's expectations, while the funding capability of Netmarble, another South Korean gaming firm, was in doubt, the paper added.

Nexon, Netmarble and MBK declined to comment. Reuters was not able to reach Kim. Tencent has previously declined to comment on any interest in the NXC stake. Kakao did not immediately comment on the news, when contacted by Reuters.

Nexon shares rose 3% on Tuesday in a flat wider Tokyo market <.N225>.

Netmarble, whose shares have been weighed down by the prospect of a Nexon deal, announced a share buyback worth 200 billion won ($169.53 million) on Tuesday, sending its shares up by as much as 8.4%.

Taking into account the market value of Nexon and a takeover premium of 15% - around the standard for other gaming deals, according to Dealogic data - the deal was seen this year as being worth about $16 billion, ranking it among South Korea's biggest.

Formal bidding for the stake was delayed from mid-May, sources had told Reuters.

"It seems that few bidders have financial capability to buy Nexon with a high price tag," Lee Mina, an analyst at KTB Securities, said.

She said a dearth of hit games from Nexon since DNF, which was launched in 2005, was one of the "risks" to bidders.

Morgan Stanley, which sources said was one of the advisers hired by Kim to explore a sale of his NXC stake, was not immediately available for comment. Deutsche Bank, another adviser, according to the sources, declined to comment on Monday.

(Reporting by Heekyong Yang and Ju-min Park, Additional reporting by Anshuman Daga in SINGAPORE, Writing by Hyunjoo Jin; Editing by Himani Sarkar and Muralikumar Anantharaman)

By Heekyong Yang and Ju-min Park


ę Reuters 2019
Stocks mentioned in the article
ChangeLast1st jan.
ANHUI JIANGHUAI AUTOMOBILE GROUP CORP.,LTD. 2.47% 14.1 End-of-day quote.15.29%
DEUTSCHE BANK AG 1.58% 10.656 Delayed Quote.19.07%
KAKAO CORP. -3.77% 115000 End-of-day quote.47.63%
LETS HOLDINGS GROUP CO., LTD. 0.31% 6.52 End-of-day quote.-16.20%
LOOK HOLDINGS INCORPORATED -1.01% 1374 End-of-day quote.43.57%
MBK CO.,LTD. -10.63% 353 End-of-day quote.8.62%
MIRAINOVATE CO., LTD. -4.17% 23 End-of-day quote.-23.33%
MORGAN STANLEY 2.73% 103.55 Delayed Quote.51.10%
NASPERS LIMITED 2.16% 2479.82 End-of-day quote.-17.87%
NETMARBLE CORPORATION -0.82% 121000 End-of-day quote.-7.98%
NEXON CO., LTD. -1.14% 1728 End-of-day quote.-45.66%
NEXON GT CO., LTD. -0.95% 10450 End-of-day quote.-20.83%
TENCENT HOLDINGS LIMITED 2.93% 463.2 End-of-day quote.-17.87%
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Financials
Sales 2021 5 927 B 5,04 B 5,04 B
Net income 2021 937 B 0,80 B 0,80 B
Net cash 2021 3 774 B 3,21 B 3,21 B
P/E ratio 2021 55,8x
Yield 2021 0,03%
Capitalization 49 757 B 42 407 M 42 344 M
EV / Sales 2021 7,76x
EV / Sales 2022 5,94x
Nbr of Employees -
Free-Float 64,8%
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Number of Analysts 29
Last Close Price 115 000,00 KRW
Average target price 166 724,14 KRW
Spread / Average Target 45,0%
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Managers and Directors
Min-Soo Yeo Co-Chief Executive Officer & Director
Su-Yong Jo Co-Chief Executive Officer & Director
Beom-Soo Kim Chairman
Tae-Sung Jung Head-Compliance Support
Kyu-Jin Cho Independent Director
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