Tencent seeks to buy stake in Nexon at $15b

The headquarters of Nexon in Pangyo, Gyeonggi Province (Nexon)

Tencent is reportedly considering acquiring a stake in South Korean game giant Nexon at 20 trillion won ($15 billion), a move that would further solidify the Chinese tech giant’s presence in the Korean cultural content market.

According to Bloomberg, Tencent Holdings has reached out to the family of Nexon’s late founder Kim Jung-ju to discuss the possibility of an acquisition. The report added that the size or structure of the deal is unclear. Both Tencent and Nexon have declined to respond to the report.

Kim’s wife and daughters own about 67.6 percent of the game giant’s holding company NXC. Through NXC, they own a 44.4 percent stake in Nexon. Considering the stakes, the deal is estimated to be worth 20 trillion won.

The other 30.64 percent stake in NXC is owned by the Korean government. Kim’s relatives turned in the shares worth roughly 4.7 trillion won to the government to pay off an inheritance tax. The Finance Ministry has been trying to sell the stake through a tender offer but has failed on multiple occasions.

Tencent has long shown interest in Nexon. In 2019, it was named as a potential bidder when NXC was put up for sale. It ultimately did not participate in the bidding. At the time, market big names including Kakao and Netmarble submitted bids, but the sale was eventually called off without a deal.

Tencent has been pushing to tighten its grip on the Korean cultural content market through strategic equity investments, holding 34.76 percent stake in Shift Up, 13.71 percent of Krafton, and 17.52 percent in Netmarble, making it the second-largest shareholder in each. It is also the third-largest shareholder in Kakao Games with a 3.88 percent stake.

In May, Tencent Music Entertainment, a subsidiary of the Chinese tech giant, acquired the entire 9.38 percent stake of K-pop powerhouse SM Entertainment held by Hybe, valued at approximately 200 billion won. The acquisition positioned Tencent as the second-largest effective shareholder of SM.

With the talks of an acquisition deal brewing up, shares of Tokyo-listed Nexon surged as much as 10 percent shortly after the market started trading Friday. Seoul-listed Nexon Games saw a 10 percent surge in its share price as well.