Tencent, buyout firms are said to weigh potential bids for Nexon

HONG KONG • Tencent Holdings Ltd as well as private equity firms Hillhouse Capital and KKR & Co Inc are considering bids to acquire a major stake in gaming company Nexon Co Ltd, people familiar with the matter said.

Tencent is evaluating a possible bid and could team up with some investment funds, the people said, asking not to be identified because the deliberations are private.

Other global companies as well as buyout funds have expressed interest in a potential deal for Nexon, the people said. Blackstone Group LP is also considering a bid, a person familiar said.

South Korean billionaire Kim Jung-ju, who controls Nexon through his NXC Corp, is looking to sell down his stake in the Tokyo-based gamemaker. That is opening up opportunities for companies such as Tencent to bolster their portfolios with popular titles such as MapleStory as a crackdown on new games in China continues to hit operators in its home country.

NXC is working with financial advisors Deutsche Bank and Morgan Stanley as it weighs options including selling part of its 47% stake or a full sale of the company, the people said. Considerations are at an early stage and the companies could still decide against pursuing any transaction, the people said.

Shenzhen-based Tencent is only focused on NXC’s game assets and isn’t interested in its cryptocurrency-related businesses, according to one person familiar with the Chinese company’s thinking. In October, NXC bought digital currency exchange Bitstamp and also owns South Korean exchange Korbit.

Representatives for Hillhouse, KKR, Tencent, Blackstone, Deutsche Bank, Morgan Stanley and Nexon declined to comment. The Maeil Business Newspaper reported earlier this month that Tencent and private equity firms are considering bids for NXC’s stake or the company itself.

Nexon shares reversed losses and rose 6.4% to ¥1,697 (RM64.02), the highest closing level since July.

China, the world’s biggest gaming market, has only recently resumed game approvals with last year’s freeze hitting profitability at companies from Tencent to NetEase Inc. In November, Nexon missed analyst estimates for quarterly earnings after saying revenue in the mainland will drop by about a fifth in the December quarter. — Bloomberg