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HONG KONG (Yonhap News) ― Foreign investment banks have a positive view on South Korea’s online game giant Nexon Korea Corp.’s takeover of its smaller rival on the home turf, bank officials said Friday.
In a surprise move, Nexon announced last Friday it had acquired a majority stake in NCsoft Corp. from the latter’s founder and chief executive Kim Taek-jin through a private transaction.
Following the deal, Nexon is now the largest shareholder of NCsoft with a 14.7 percent stake, followed by Kim with a 9.9 percent.
A number of leading IBs have predicted the acquisition will be mutually beneficial in the long run.
“It gives Nexon exposure to the whole gamut of online games, while NCsoft may be able to benefit from the more commercial management style of Nexon as well as better execution in overseas markets,” said Chang Sung-min, an analyst at J.P. Morgan.
Nexon’s management has shown strength in generating growth at low costs, whereas NCsoft’s overriding mandate has been developing high quality games, he explained.
“Nexon also generates a substantially higher percentage of revenue from overseas compared to NCsoft, and this is something that can potentially benefit NCsoft. As a combined entity, they may also be able to have more leverage in working out terms with overseas publishers down the road,” the analyst said.
Goldman Sachs analyst Takayoshi Koike shared the view, saying the two companies’ respective strengths are complementary.
“Nexon has a large stable of free-to-play titles aimed at middle-core users, as well as a solid user base and a strong global platform. NCsoft specializes in subscription mass multiplayer online role playing game, aimed at core users, and has strong intellectual property and development capabilities,” Koike said.
“We think the alliance could spur the creation of new businesses.”
Nomura’s Stanley Yang said the transaction will likely lead to similar moves in the global game industry.
“We believe the deal could trigger competition among global online game companies for seeking lucrative merger and acquisition deals, and could further accelerate the M&A theme in the global online gaming sector,” Yang said.
On Friday, NCsoft closed at 250,000 won, down 2.91 percent from the previous session. Nexon, which is listed on the Japanese stock exchange, gained 0.14 percent to 1,394 yen ($17.66).
In a surprise move, Nexon announced last Friday it had acquired a majority stake in NCsoft Corp. from the latter’s founder and chief executive Kim Taek-jin through a private transaction.
Following the deal, Nexon is now the largest shareholder of NCsoft with a 14.7 percent stake, followed by Kim with a 9.9 percent.
A number of leading IBs have predicted the acquisition will be mutually beneficial in the long run.
“It gives Nexon exposure to the whole gamut of online games, while NCsoft may be able to benefit from the more commercial management style of Nexon as well as better execution in overseas markets,” said Chang Sung-min, an analyst at J.P. Morgan.
Nexon’s management has shown strength in generating growth at low costs, whereas NCsoft’s overriding mandate has been developing high quality games, he explained.
“Nexon also generates a substantially higher percentage of revenue from overseas compared to NCsoft, and this is something that can potentially benefit NCsoft. As a combined entity, they may also be able to have more leverage in working out terms with overseas publishers down the road,” the analyst said.
Goldman Sachs analyst Takayoshi Koike shared the view, saying the two companies’ respective strengths are complementary.
“Nexon has a large stable of free-to-play titles aimed at middle-core users, as well as a solid user base and a strong global platform. NCsoft specializes in subscription mass multiplayer online role playing game, aimed at core users, and has strong intellectual property and development capabilities,” Koike said.
“We think the alliance could spur the creation of new businesses.”
Nomura’s Stanley Yang said the transaction will likely lead to similar moves in the global game industry.
“We believe the deal could trigger competition among global online game companies for seeking lucrative merger and acquisition deals, and could further accelerate the M&A theme in the global online gaming sector,” Yang said.
On Friday, NCsoft closed at 250,000 won, down 2.91 percent from the previous session. Nexon, which is listed on the Japanese stock exchange, gained 0.14 percent to 1,394 yen ($17.66).
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Articles by Korea Herald
