NCSOFT, Netmarble tie up against Nexon

NCSOFT CEO Kim Taek-jin, left, and Netmarble Games Senior Advisor Bang Jun-hyuk hold a memorandum of understanding after signing to a deal to cooperate in the online and mobile game sector during a press conference at the Plaza Hotel in central Seoul, Tuesday.
/ Korea Times photo by Choi Won-suk

By Yoon Sung-won

NCSOFT and Netmarble Games, two of the country's major game companies, said Tuesday they have established a stock-swap alliance to fend off management intervention by Nexon.

NCSOFT sold a total of 1.96 million treasury shares worth 391 billion won to Netmarble Games. This is 8.93 percent of NCSOFT's total shares.

NCSOFT also acquired a 9.8 percent stake in Netmarble Games for 380 billion won.

Their alliance came after Nexon, a major shareholder of NCSOFT, made it clear that it will intervene in management decisions.

"Netmarble promised to help us successfully enter the mobile game market and we will support Netmarble by providing our global online game intellectual properties," NCSOFT CEO Kim Taek-jin said during a press conference at the Plaza Hotel in central Seoul, Tuesday.

"This is a cross marketing initiative for both of us and we decided to invest in each other to share our core values."

For Netmarble, the cooperation is expected to be another favorable factor for its business, following a $500 million investment it attracted from Chinese game giant Tencent last year.

Bang Jun-hyuk, founder and senior advisor of Netmarble Games, said, "Though Netmarble has led the domestic mobile game market, we needed a partner with strengths in game intellectual property rights and development capability."

Bang said NCSOFT's online role-playing game "AION" is likely to be the first project that will be released on Netmarble's mobile platform.

The move came as NCSOFT has been in a dispute with Nexon over management rights.

As the largest shareholder with over 15 percent, Nexon sent a shareholder's proposal to NCSOFT and revealed its intention to directly participate in management by saying that it will name candidates for new board members.

In the Feb. 3 proposal, Nexon urged NCSOFT to dispose of its 8.9-percent treasury stocks in order to expand dividend payouts. Nexon also said NCSOFT should cooperate with third parties more closely in its game businesses.

NCSOFT, however, has doubted the effect of Nexon's intervention, saying that the two companies have different business philosophies.

It also refused to dispose the treasury stocks. Chief Financial Officer Yoon Jae-soo said in a conference call Feb. 11 that it will keep the treasury stocks to use them for important investments in the future.

Regarding the dispute, the Netmarble founder said he will support NCSOFT executives assuming that they will steer the business well in the global market.

Both Kim and Bang, however, denied the allegation that the decision to establish the alliance was affected by the recent dispute.

"It is nonsense that Netmarble is making an investment to deal with NCSOFT's management rights problem. The Korean game industry, including us, is vulnerable if global game giants from North America and China rush into the local market. The cooperation came amid such a sense of crisis," Bang said.

"In this unprecedentedly significant event in the local game industry, Bang seems to be the biggest beneficiary because he could acquire access to NCSOFT's much sought-after online games with almost no loss," an industry source said. "Expectations are that Nexon will take more aggressive countermeasures against the alliance soon."

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