Brief Korea: Nexon:  Deal Structure, Valuations, Question Marks and more

In this briefing:

  1. Nexon:  Deal Structure, Valuations, Question Marks
  2. Nexon Sale: Main Bidding on May 15, NXC Stake Up for Sale & No Mandatory Tender
  3. China’s New Semiconductor Thrust – Part 3: Market Size and Impact to Competition
  4. Korea Interest Rates – Next Move Down
  5. Economic Analysis of Mozambique’s LNG Projects: Huge Potential but Financing Risks Remain

1. Nexon:  Deal Structure, Valuations, Question Marks

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I have been somewhat reticent to add to the written discussion on Nexon Co Ltd (3659 JP)‘s possible change of control due to the sale of Founder Kim Jung-Ju’s personal holding company NXC Corp because there has been so little consistency to the news which comes out. 

Numbers fly around but there are no references to what they mean or include. Originally first round was in mid-Feb, but that got extended, then it looked like a number of the players simply dropped out, or were demoted to side players. Then it looked like there was a question of whether a buyer would buy NXC or buy the Nexon shares. There were a couple of articles a couple of weeks ago from the Korean press suggesting buying NXC was going to prove “too difficult.”

There are a lot of reasons for that. 

Then today an article in the Korea Economic Daily came out and suggested that a) the deal was still for NXC, not Nexon shares, and b) NXC and its bankers had received an opinion from the Tokyo Stock Exchange that a Tender Offer for Nexon shares would not be mandatory. 

Hmmm…

2. Nexon Sale: Main Bidding on May 15, NXC Stake Up for Sale & No Mandatory Tender

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One of Korea’s largest local economic newspapers, The Korea Economic Daily, reports that Nexon’s main bidding will take place on May 15. It also reports that it is the Kim Jung-ju family’s NXC stake to be put up for sale. As for tender, TSE advises in a written opinion that there will be no mandatory tender as a result of NXC stake sale. That is, tender will be optional.

3. China’s New Semiconductor Thrust – Part 3: Market Size and Impact to Competition

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China’s current efforts to gain prominence in the semiconductor market targets memory chips – large commodities.  This three-part series of insights examines how China determined its strategy and explains which companies are the most threatened by it.

This third part of the series  sizes the  market and projects the impact on existing suppliers.

4. Korea Interest Rates – Next Move Down

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We expect interest rates will be declining by the end of the year. BoK Governor Lee Ju-yeol is running out of excuses not to ease monetary policy. Inflation is trending down and is below the central bank’s 2% target. Household borrowing has been slowing for months while the Korean economy is rapidly losing growth momentum. Lower rates will bring little relief however. The outlook is dim. We reiterate our underweight call on Korean equities.

5. Economic Analysis of Mozambique’s LNG Projects: Huge Potential but Financing Risks Remain

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Around 10 years after the first major gas discoveries, Mozambique should see two mega LNG projects sanctioned this year, with an investment of almost four times the country’s GDP. There is huge value creation potential for the people of Mozambique and a good return for the project participants, if the Government can ensure a sound economic environment to operate in. Over the life of projects, there is the potential for around US$100bn in cash flow to the Mozambique people, which would clearly be transformational for Mozambique, with current GDP <$15bn and GDP per capita of <$500. For example, LNG catapulted Qatar to having a leading global GDP per capita. For Mozambique, accessing these future cashflows is reliant on the success of the project financing discussions currently taking place. See A Huge Wave of New LNG Projects Coming in the Next 18 Months: Positive for The E&C Companies

Source: Anadarko

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