Tencent Reportedly Eying a Potential Takeover of Nexon

• Tencent is in talks with the family of late Nexon founder Kim Jung-ju about a possible acquisition.
• The potential deal, reportedly valued at around $15 billion USD, boosted Nexon’s share price by 10%.
• Details of the acquisition’s size and structure remain unclear, with both parties declining to comment about it publicly.

Chinese internet giant Tencent has approached the family of late Nexon founder Kim Jung-ju about a potential acquisition of the South Korean game developer, Bloomberg reported, citing people familiar with the matter.. This would be a move that would further cement Tencent’s presence in the Korean cultural content market. According to Bloomberg, this has already led to a 10% surge in Nexon’s share prices. However, the size and structure of the deal are unclear, and neither party has commented on the matter thus far.

Tencent Eyeing $15 Billion USD Takeover of Nexon

Shenzhen-based internet giant Tencent has reportedly reached out to the family of Nexon’s late founder for a possible acquisition, and Kim Jung-ju’s kin have been consulting with advisers to evaluate their options. 

Kim’s immediate family owns around 67.6% of family investment firm NXC Corp (NXC), which owns 44.4% of Nexon, according to Nexon’s interim report. Given these numbers, the deal is estimated to be worth 20 trillion won ($14.6 billion). It should be noted that the remaining 30.64% stake in NXC is owned by the Korean government. It remains unclear whether NXC is interested in selling its Nexon stake, and there is no guarantee Tencent's approach will lead to a deal. 

On June 13 in early trading, the shares of Nexon Games surged. While Bloomberg had reported a 10% surge, the Maeil Business Newspaper said that it was 12% after news of Tencent’s eyeing Nexon for a takeover. As of 10:25 am Korean time, Nexon Games was trading at 17,030 won on the KOSDAQ market, a solid 11.75% increase from the previous trading day.

Nexon and Tencent previously co-developed a role-playing game series called Dungeon & Fighter. This is not the first time Tencent has tried its hand at acquiring Nexon. In 2019, the Chinese company was named a potential bidder when NXC was up for sale. However, it did not participate in the bidding due to “pricing disagreements”. Other big names like Kakao and Netmarble had submitted their bids, but the sale was eventually called off without a deal.

Tencent has reportedly been strengthening its grip in the South Korean cultural and content market through various investments. It holds 34.76% stake in Shift Up, 13.71% of Krafton, and 17.52% in Netmarble, becoming the second-largest shareholder in each of those companies. It is also the third-largest shareholder in Kakao Games with a 3.88% stake. Additionally, early this year on May 28, Tencent’s subsidiary, Tencent Music Entertainment, acquired a 9.38% stake of K-pop giant SM Entertainment held by Hybe. This deal positioned Tencent as the second-largest shareholder of SM.