Nexon’s stock dips following rumors that its massive buyout has been canceled

    
9

After many months of speculation on who exactly would be allowed to bid on Nexon by buying out its founding family’s controlling stake in the company (at one point said to be worth between $9B and $11B), we thought we finally had our answer at the start of June. Both Kakao and Netmarble submitted bids, along with private equity firms KKR & Co., Bain Capital, and MBK Partners. It was going to be one them, right?

Nope.

According to an article on Bloomberg last night, The Korea Economic Daily quoted anonymous sources who’ve leaked that patriarch Kim Jung-ju has decided not to sell the familial stake after all and had assigned the involved banks to deliver the news to the potential buyers. The Korean Electronic Times further suggested that negotiations had stalled out over the purchase price.

Whether or not the rumors are true, the company’s stock took a dip in response, up to 5% lost. Bloomberg says Kim’s stake is worth $6.1B after the the news.

Source: Bloomberg

9
LEAVE A COMMENT

Please Login to comment
  Subscribe  
newest oldest most liked
Subscribe to:
PurpleCopper
Reader
PurpleCopper

Oh man, what’s a billion dollar video game company to do?

Reader
Bruno Brito

“Oh! Woe is me for not being able to sell this massively profitable company!”

Reader
silverlock

Why even go for a single big buyout why not just sell blocks of stock over time?

Reader
Mark Jacobs

Couple of reasons SL (there are more):

1) He can ask for more if he’s handing over total control of the company with his majority stake. Getting full control of the company would be the goal of the kind of people he was/is talking to.

2) If he sells chunks, he runs the risk of the stock going down. 2018 was a record-setting year for them. The perfect time to sell your stock. Plus, as per above, being a minority owner in a family-owned company won’t be anywhere as attractive which in turns lowers the valuation.

There are other reasons, but those are two of the biggest.

Mewmew
Reader
Mewmew

“Whether or not the rumors are true, the company’s stock took a dip in response, up to 5% lost. Bloomberg says Kim’s stake has now been devalued from $8.6B to $6.1B on the news.”

Yeah uh, someone is doing their math wrong and / or reading the article wrong :D

Kim wanted to get 8.6 billion, but his stake wasn’t worth that much. His stake was worth around 6.4 billion before the devaluation, and is worth about 6.1 billion now.

See that’s the issue, he wants over 2 billion more than it’s worth and the companies don’t want to overpay that much.

Lol come on it’s funny to imagine 5% of 8.6 billion as an entire 2.5 billion (it’s actually only 430 million). If his stock would have been worth 8.6 billion and dropped 5% it would then be worth around 8.2 billion rounding up a bit, not all the way down to 6.1! That would be close to a 30% change :P

Reader
Kickstarter Donor
Darthbawl

negotiations had stalled out over the purchase price.

I am no financial guru but that reads to me as “seller didn’t get the price they were asking for.”

Covynant001
Reader
Covynant001

In light of a general weakening of the gaming market this year and growing govt concerns over predatory monetization models I’m guessing bids were lower than anticipated.

Reader
Mark Jacobs

I think you are both right. I’d also add the fact that their upcoming slate might have troubled people aside from the usual fears about the highly competitive mobile market.

Another big problem for Nexon is their lack of a lot of strong, Western-focused/friendly IP. This isn’t necessarily a problem for companies like Tencent, but if you get names like Amazon,Disney, etc. in the mix, they would love to see things that the execs think can be evergreens in the US. Nexon hasn’t had a lot of luck with the games they hoped could make money in the west.

If Mr. Kim was truly trying to sell the company, he’ll regroup and then try to sell it again. If I were Owen M. and I wanted to help my boss sell the company, I’d be continue to look to develop some new and original IP for games/films in the West. Not easy, but if you want to get a big win with Western-based acquirers, that would help a lot, at least IMHO.

Reader
Mikka Hansen

Meh, they’ll make another ultra-predatory mobile game and bounce back up