Kakao considers a bid for Nexon

Kakao may take part in a 10 trillion won ($8.9 billion) bid for Nexon, the Tokyo-based, Korea-founded game publisher.

“We’re at the stage of internally discussing whether we want to participate in the bid,” Kakao said in a statement. “But no decision has been made yet.”

Local media reported the previous day that the company has already made up its mind to bid and appointed a law firm to examine the deal. Kakao said these reports were not true.

Earlier this month, Nexon founder Kim Jung-ju put 98.64 percent of NXC, Nexon’s holding company, up for sale. NXC owns a 47.98 percent stake in Nexon.

Nexon, which is listed on the Tokyo Stock Exchange, has a market capitalization of 15 trillion won ($13.4 billion). Analysts say the deal itself will be valued at about 10 trillion won.

Companies considered strong candidates for the deal have mostly been non-Korean, including China’s Tencent, The Walt Disney Company, Electronic Arts and a number of global private equity funds.

Tencent already has a 6.7 percent stake in Kakao, invested 50 billion won in unlisted Kakao Games and has 17 percent of Netmarble, a Korea Exchange-listed game company.

Kakao’s interest may, in part, be driven by its existing exposure to the sector with its stake in Kakao Games.

If Jeju City-based Kakao does make a bid, it will probably need to form a partnership with another company as its financial position may not be strong enough.

In the third quarter last year, the company reported 1.5 trillion won in cash and equivalents.

Although the IT company said it is still undecided on the transaction, even the possibility of the acquisition generated some excitement.

The market is worried about a foreign takeover of Nexon - one of the country’s prime gaming assets - and the leak of talent and technology that would inevitably result.

Responding to concerns of this sort, NXC CEO Kim offered vague reassurances, saying that any decision made “will be in a way that can give back benefits received from our society.”

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]