Korea to sell $3.6 bn stake in NXC via private offering

The South Korean government is seeking to sell a 4.71 trillion won ($3.6 billion) stake in gaming giant NXC Corp. via private placement as the authorities failed to find a potential second-largest shareholder of the firm via tender offer this month.

The government failed in finding a suitor for a 29.3% stake in NXC, the holding firm of Tokyo-listed game developer and publisher Nexon Co., in the Dec.18-19 first bid round and the Dec. 25-26 second round, state-owned Korea Asset Management Corp. (KAMCO) said on Friday.

The price tag combines the value of 29.3% ownership, 3.93 trillion won, plus 20% of the value as a premium required by Korea’s inheritance and gift tax law.

The equity, a payment-in-kind, was handed over from the two daughters of NXC’s late Chairman Kim Jung-ju to the government to fund their inheritance tax in May. As Kim died in February of last year, his daughters came to inherit all his ownership in NXC, a 67.49% stake.

The 4.71 trillion won payment-in-kind is the largest-ever inheritance tax paid as securities to the Korean government. The late chairman’s wife Yoo Jung-hyun owns 34% of NXC, while each of the two daughters holds 16.81%. 

The government will seek privately negotiated transactions to divest of the NXC stake. The authorities are likely to sell the stake to more than one buyer, according to banking sources.  

It has not been easy to find a bidder as an investor with 29.3% ownership wouldn't have substantial influence in any important management decisions at general shareholders meetings, banking sources said. The non-listed holding firm’s dividend payout ratio is 5.5%, which is not enough to attract bidders, sources added.

Although a sale of a minority stake often provides downside protection to bidders, the transaction of NXC shares is not likely to offer such conditions as the seller is the government.

The bid could attract investor interest if it provides potential buyers with the right of first refusal, which may help a second-largest shareholder become the largest investor in the future, sources say. In such a case, when a shareholder wants to sell stocks, it should make the first offer to the holder of the right.

Write to Ji-Eun Ha at hazzys@hankyung.com


Jihyun Kim edited this article.