Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

Last Week in Event SPACE: Nexon, Bandhan Bank, M1, Healius, Faroe, Toshiba, Swire

Last Week in Event SPACE: Xiaomi, NTT, Capitaland, Panalpina, Celgene/Bristol Myers, Amorepacific

RRG Global Macro Weekly - Dramatic Brexit Defeat A Positive for Markets? We Are Not So Sanguine

Korea M&A Spotlight: Will the Nexon Group Sell the Korean or the Japanese Company?

Korea M&A Spotlight: Nexon's Founder Plans to Sell; Will Tencent Buy Nexon?

Quiddity Advisors

Event-Driven

It was reported on January 3rd that Korean founder and heretofore effective controller of <a href="https://www.smartkarma.com/entities/16032" target="_blank" data-smartkarma-citation="entities:16032:1">Nexon Co Ltd (3659 JP)</a> Mr. Kim Jung-Ju and family, who exercise their ownership of Nexon through near 100% (98.64% according to <a href="https://www.smartkarma.com/profiles/342" target="_blank" data-smartkarma-citation="accounts:342">Douglas Kim</a>) control of NXC Corp (Korea) and NXC's control of NXMH B.V.B.A (Belgium), planned to sell their stakes in NXC for up to 10 trillion won (US$8.9 billion).
Those two companies - NXC Corp (Korea) and NXMH (Belgium) - own 253.6mm shares and 167.2mm shares respectively, or direct and indirect ownership by NXC of just under a 48% stake in Nexon (3659 JP). Yoo Junghyun (Kim Jung-Ju's wife) directly holds another 5.12mm shares at last look. 
The speculation is that it might be sold to <a href="https://www.smartkarma.com/entities/26" target="_blank" data-smartkarma-citation="entities:26:1">Tencent Holdings (700 HK)</a> or another global buyer because it might be too big a mouthful to swallow for <a href="https://www.smartkarma.com/entities/5169" target="_blank" data-smartkarma-citation="entities:5169:1">NCsoft Corp (036570 KS)</a> and <a href="https://www.smartkarma.com/entities/22839" target="_blank" data-smartkarma-citation="entities:22839:1">Netmarble Games (251270 KS)</a>, each of which have a market cap in the area of 10 trillion won themselves. 
Nexon was founded in Korea in 1994 and moved its headquarters from Seoul to Tokyo in 2005, listing itself on the TSE in December 2011. The company is a well-known gamemaker (over 80 PC and online/mobile games), with famous games such as MapleStory, Dungeon &amp; Fighter, and Counter Strike.
<a href="https://www.smartkarma.com/profiles/342" target="_blank" data-smartkarma-citation="accounts:342">Douglas Kim</a> has started the discussion of this situation in <a href="https://www.smartkarma.com/insights/korea-m-a-spotlight-nexon-s-founder-plans-to-sell-will-tencent-buy-nexon" target="_blank" data-smartkarma-citation="insights:27017">Korea M&amp;A Spotlight: Nexon's Founder Plans to Sell; Will Tencent Buy Nexon?</a> and <a href="https://www.smartkarma.com/insights/korea-m-a-spotlight-will-the-nexon-group-sell-the-korean-or-the-japanese-company" target="_blank" data-smartkarma-citation="insights:27153">Korea M&amp;A Spotlight: Will the Nexon Group Sell the Korean or the Japanese Company?</a>. 
The Korea Economic Daily said in its report on the 3rd of January that Deutsche Bank and Morgan Stanley had been selected as advisors to run a sale process, and a formal non-binding offer to potential bidders was expected next month. A Korea Herald <a href="http://www.koreaherald.com/view.php?ud=20190103000560" target="_blank">article</a> suggested that "potential buyers, according to industry speculation, include China’s Tencent, Korea’s Netmarble Games, China’s NetEase and Electronic Arts of the US."
<h2>The Big Question</h2>
In the second piece, Douglas Kim questions whether Kim Jung-Ju would sell NXC (and NXMH) as reported by the local press, or whether NXC and NXMH would sell their stakes in Japan-listed Nexon, the implication being that if they sold the stake in Nexon, it would mean buyers would get a large stake in a single company, whereas there is a bunch of other stuff floating around in NXC and its subsidiaries. 
The other question is whether Tencent or another buyer buying NXC would trigger a mandatory Tender Offer for the shares in Nexon in Japan. The letter of the law in the TOB Rules changed a bit over 10 years ago would indicate not, but there are questions (and precedents) here.
Discussion ensues.

It was reported on January 3rd that Korean founder and heretofore effective controller of Nexon Co Ltd (3659 JP) Mr. Kim Jung-Ju and family, who exercise their ownership of Nexon through near 100% (98.64% according to Douglas Kim) control of NXC Corp (Korea) and NXC's control of NXMH B.V.B.A (Belgium), planned to sell their stakes in NXC for up to 10 trillion won (US$8.9 billion).
Those two companies - NXC Corp (Korea) and NXMH (Belgium) - own 253.6mm shares and 167.2mm shares respectively, or direct and indirect ownership by NXC of just under a 48% stake in Nexon (3659 JP). Yoo Junghyun (Kim Jung-Ju's wife) directly holds another 5.12mm shares at last look. 
The speculation is that it might be sold to Tencent Holdings (700 HK) or another global buyer because it might be too big a mouthful to swallow for NCsoft Corp (036570 KS) and Netmarble Games (251270 KS), each of which have a market cap in the area of 10 trillion won themselves. 
Nexon was founded in Korea in 1994 and moved its headquarters from Seoul to Tokyo in 2005, listing itself on the TSE in December 2011. The company is a well-known gamemaker (over 80 PC and online/mobile games), with famous games such as MapleStory, Dungeon &amp; Fighter, and Counter Strike.
Douglas Kim has started the discussion of this situation in Korea M&amp;A Spotlight: Nexon's Founder Plans to Sell; Will Tencent Buy Nexon? and Korea M&amp;A Spotlight: Will the Nexon Group Sell the Korean or the Japanese Company?. 
The Korea Economic Daily said in its report on the 3rd of January that Deutsche Bank and Morgan Stanley had been selected as advisors to run a sale process, and a formal non-binding offer to potential bidders was expected next month. A Korea Herald article suggested that "potential buyers, according to industry speculation, include China’s Tencent, Korea’s Netmarble Games, China’s NetEase and Electronic Arts of the US."
The Big Question
In the second piece, Douglas Kim questions whether Kim Jung-Ju would sell NXC (and NXMH) as reported by the local press, or whether NXC and NXMH would sell their stakes in Japan-listed Nexon, the implication being that if they sold the stake in Nexon, it would mean buyers would get a large stake in a single company, whereas there is a bunch of other stuff floating around in NXC and its subsidiaries. 
The other question is whether Tencent or another buyer buying NXC would trigger a mandatory Tender Offer for the shares in Nexon in Japan. The letter of the law in the TOB Rules changed a bit over 10 years ago would indicate not, but there are questions (and precedents) here.
Discussion ensues.

Take Two Interactive Software, Inc (TTWO US)

創業者の持ち株会社NXC Corpの売却はネクソン（3659 JP）に対する株式公開買付けのきっかけとなるか？