Tencent Is Looking to Buy Nexon, the Creator of Web 3 Gaming Franchise MapleStory

Tencent, the Chinese technology behemoth, is reportedly exploring a potential acquisition of Nexon, a prominent South Korean video game developer renowned for its hugely popular title, Dungeon & Fighter. This move, if successful, would mark a significant resurgence of Tencent’s global gaming mergers and acquisitions (M&A) activity, following a period of slowdown triggered by Chinese regulatory interventions in 2020.

Bloomberg reports that Tencent has initiated preliminary discussions with the family of Nexon’s late founder, Kim Jung-ju, who retains a substantial 44.4% stake in the company through NXC Corp. The acquisition would involve a company boasting a market capitalization of $16.6 billion, granting Tencent control over valuable intellectual property and strengthening its presence in South Korea’s highly profitable gaming sector.

Nexon’s strategic focus on Web3 gaming, notably its ambitious expansion of the MapleStory franchise into this space, adds another layer of complexity and potential value to the acquisition. This aligns with Tencent’s own burgeoning interest in blockchain technology, recently exemplified by their memorandum of understanding (MoU) with Ankr to develop blockchain API services.

However, the deal faces significant hurdles. The Kim family, having inherited control following Kim Jung-ju’s passing in 2022, has already transferred shares to the Korean government to settle inheritance taxes. The government’s inability to divest its stake presents a considerable challenge to the acquisition’s smooth progression. Furthermore, Tencent’s previous attempt to acquire Nexon in 2019 ultimately failed due to disagreements over valuation.

This renewed pursuit by Tencent follows other significant investments, including a $1.3 billion investment in a new Ubisoft unit and a 10% stake in the K-pop agency SM Entertainment. The outcome of these negotiations remains uncertain, but a successful acquisition would represent a major strategic win for Tencent, bolstering its global gaming portfolio and Web3 presence. The complexities surrounding the inheritance tax issue and the previous failed negotiations, however, indicate a challenging path ahead for Tencent.