Reports of Amazon interest lift Nexon stocks

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Reports of Amazon interest lift Nexon stocks

A recent report that global tech giants Amazon and Comcast will join the bidding for Nexon boosted the shares of the Korean game publisher and its affiliates on Thursday.

Shares of Nexon, which is listed on the Tokyo Stock Exchange, jumped 4.68 percent to close at 1,767 yen ($15.96) over reports at home and abroad that Amazon, Comcast and Electronic Arts reportedly submitted initial bids to acquire a controlling stake in Nexon’s holding company - worth around 10 trillion won ($8.9 billion).

Nexon GT, a Kosdaq-listed gaming software unit, gained 11.64 percent to close at 12,950 won after soaring nearly 20 percent in the early morning session. Shares of Nat Games, a mobile game developer held by Nexon, also rose 2.79 percent to close at 11,050 won.

The bids would pit the U.S. companies against Korean tech companies Kakao and Netmarble.

Netmarble said it will form a consortium with China’s Tencent and private equity fund MBK Partners while other global private equity firms like KKR and investment firm Bain Capital have also jumped into the race.

The move came after a report last month that Kim Jung-ju, chairman of NXC, the de facto holding company of Nexon, will sell all or a sizable portion of his 98.64 percent stake in NXC.

The shares include Kim’s holdings, at 67.49 percent, those held by his wife, at 29.43 percent, as well as 1.72 percent held by Wise Kids, a software company Kim owns.

NXC owns a 47.98 percent stake in Nexon, worth about 6 trillion won.

Nexon has a market capitalization of 15 trillion won and analysts say the deal itself will be valued at about 10 trillion won.

While foreign bidders have so far stayed quiet about their participation, their potential suitors in Korea have made it official.

Netmarble confirmed that it is in the running to acquire a major stake in Nexon and has been working on the deal for months.

The announcement came just one day after Kakao said it is considering a bid for the gaming company.

Netmarble is now Korea’s No. 3 game company by market capitalization, behind Nexon and NCSoft.

Nexon’s healthy earnings could make the deal more attractive.

The company reported 98.4 billion yen in operating profit for 2018, a 9 percent increase year on year.

The company’s annual sales were 253.7 billion yen, an 8 percent rise from 2017.

Preliminary bidding closed Thursday and reported bidders have yet to confirm their participation.

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