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South Korea gaming company Netmarble preferred bidder for stake in rentals firm Coway
[SEOUL] South Korean gaming firm Netmarble was chosen the preferred bidder for a 25 per cent stake in water purifier rental firm Woongjin Coway valued at US$1.3 billion, sending shares in Woongjin's top shareholder higher.
It is the latest move by Netmarble, which holds more than a quarter of South Korea's mobile gaming market, to find new growth in non-core areas. Last year it bought a 26 per cent stake in Big Hit Entertainment, which manages the Korean boy band, BTS, for about US$170 million.
Woongjin Thinkbig, Woongjin Coway's biggest shareholder, said on Monday it was negotiating terms with Netmarble, but gave no further details. Netmarble did not comment further on its selection as the preferred bidder.
The 25 per cent stake is worth about 1.5 trillion won (S$1.74 billion) based on Woongjin Coway's current share price. Coway shares were 0.9 per cent higher.
Woongjin Thinkbig shares were up 15 per cent at 0232 GMT, while Netmarble shares were flat.
Buying a stake in Woongjin Coway, which rents water purifiers, air purifiers and bidets in South Korea, should help generate stable cash flow for the gaming firm, analysts said, but some questioned the potential for further synergies.
Netmarble has said it is aiming for stable growth by using its cloud computing and big data technology to make Coway a global business offering subscription services and products.
Woongjin Coway has operations in China and Southeast Asia, but its primary focus is on the South Korean market.
Ahn Jae-min, an analyst at NH Investment & Securities, pointed to the different customer profiles for gaming and home appliance rentals.
"It is hard to picture synergies between gaming and rental businesses, and the gaming business is more individually focused than home appliances," Mr Ahn said.
The proposed purchase would be Netmarble's first major deal this year since a US$16 billion deal to buy crosstown gaming rival Nexon collapsed in July.
Woongjin Group had announced in June that it planned to sell a 25.08 per cent stake in Woongjin Coway, just three months after the group regained control of the unit for 1.89 trillion won (US$1.6 billion).
Woongjin Thinkbig bought a 22.17 per cent stake in Woongjin Coway in March from South Korean private equity firm MBK Partners for 1.69 trillion won, nearly six years after the group had sold the unit. It subsequently bought an additional stake worth about 200 billion won.