A giant deal is on the horizon: Tencent sets its sights on Nexon, publisher of Arc Raiders and The Finals

Bloomberg reports that Chinese giant Tencent Holdings Ltd. is actively exploring the possibility of acquiring South Korean company Nexon Co. known for its hits such as MapleStory, Dungeon Fighter, The Finals and Arc Raiders, as Nexon is the parent company of Embark.

Here's What We Know

According to sources with knowledge of the matter, Tencent has approached the family of Nexon's late founder, Kim Jung-ju, to discuss the possibility of a takeover. Kim's family members are reportedly already talking to advisors and evaluating various options.

Kim's relatives own their stake through the family investment firm NXC Corp. which, together with its affiliate NXMH BV, held a 44.4% stake in Nexon. Kim's wife and daughters own about 67.6% of NXC.

It is unclear how willing NXC is to sell its stake in Nexon, and there is no certainty that Tencent's discussions will lead to a deal. The structure of any deal has not yet been finalised. A Tencent spokesperson did not respond to a request for comment, while Nexon and NXC declined to comment.

The move comes as Tencent, which already attempted to acquire Nexon in 2019, is making new attempts to enter South Korean assets.

Changes in the shareholding structure after Kim's death in 2022 could complicate any deal. Family members transferred a stake in NXC's holding company to the Korean government in 2023 to settle inheritance taxes. Kim's wife and two daughters inherited his stake in NXC after his death in Hawaii. The family also sold NXC shares back to the holding company for 650 billion won ($478 million) in August. Local media reported that the Korean government had tried to sell its stake but failed to find a buyer.

NXC had already considered selling its Nexon stake six years ago, which attracted interest from Tencent as well as buyout firms such as KKR Co. and Hillhouse. The sale was eventually shelved due to an inability to agree on a price, Bloomberg News reported at the time.

Nexon's net sales in the first quarter were about 114 billion yen, while net profit was 26 billion yen. Overall, the company is valued at $15 billion.

Source: Bloomberg