Tag: partnership

What Tencent Let CJ Games, Netmarble, and Bang Do

JoonHyuk Bang returned to Netmarble as its largest shareholder for the first time in 10 years. He has received investments totaling up to $500M from Tencent, and has managed to use this to merge Netmarble into CJ Games.

Just what kind of progress has been made so far, and what kind of future can we expect from this big surge of change? We have organized the situation with Bang , Tencent, CJ Games, and the merged CJ Netmarble(assumed).

  • Advisor JoonHyuk Bang Reclaims Netmarble with Tencent Investments
20140326205845_8512

JoonHyuk Bang

CJ E&M’s advisor JoonHyuk Bang drew out Tencent’s investments of $500M.  Among those, he used about $330M on the acquisition of shares of Netmarble, MediaWeb, N2Play, and YJM Entertainment.

As one of the most common methods in transfer of management rights, acquisition of shares represents the selling of the shares from within the company.  Simply spoken, Bang used $330M out of the investment in order to purchase the shares and the right of management of all 4 companies.

 

  • CJ Games Escapes from the Subsidiary Law with the Change in the Largest Shareholder Position

20140326205845_3527

In actuality, it is easier to say that CJ E&M has handed the full management rights of CJ Netmarble to Bang.  Before Tencent’s investment, CJ E&M had 51.4% (100,000 shares) and Bang had 48.2% (96,393 shares) of CJ Games’s shares. However, CJ E&M has sold 3,564 of its shares and added 83 shares to Bang to bring Bang just above the line for the largest shareholder position.

The reason behind their decision for the transfer of shares is to resolve their sub-sub-subsidiary’s ‘shares holdings’ issue.  According to the Fair Trade Act, a sub-subsidiary can establish its another subsidiary only when it holds 100% of its subsidieary’s(sub-sub-subsidiary) shares. As CJ Games is already a sub-subsidiary of CJ(CJ E&M is the subsidiary of CJ), it must hold 100% of the shares of CJ Games Lab, AniPark, etc.

However, with Bang becoming its largest shareholder, it was able to rid itself of the limitations put on by the FTA.

 

  • Is CJ Netmarble Worth $1.9 Billion?

20140326205847_3065

Tencent has invested a total of $500M to CJ Games. With this investment, Tencent received 75,289 of CJ Games’s shares, equaling up to 28% of the total shares. Calculating this in reverse results in the conclusion that Tencent regards the value of entire CJ Games to be around $1.9B.

While it is difficult to do a simple comparison due to the fact that up-pricing of the shares is so common in the case of foreign investments, the $2B value exceeds that of both NHN Entertainment (around $1.4B) and CJ E&M (around $1.1B). This signifies Tencent’s high evaluation of CJ Games.

 

  • CJ E&M Lowers Its Risks with Gaming and Profits

20140326205842_2248

With the transfer of shares, CJ E&M takes another step away from the gaming industry. Since it, however, still holds 35.86% of the shares of CJ Games, it is still within the boundary of taking profits from the industry while lowring any risk.

Back in 2004, CJ E&M purchased 18% of Netmarble’s shares from Bang at $75M.  Considering the current 35.86% of CJ Game shares that CJ E&M possesses along with Tencent’s recent investment, it results around $650M.

Plus it also has received $330M from CJ Games in the process of separating Netmarble and the other related 3 companies, resulting $1B in total. In conclusion, CJ E&M has profited 10 folds in just 10 years.

 

  • So What Now for CJ Netmarble?

20140326205849_5245

JoonHyuk Bang was the leading force behind the current Netmarble’s mobile business.  CJ E&M’s decision to make the change from online gaming to mobile gaming was also his decision. With Bang as the largest shareholder and without the regulation by the FTA, a more progressive action in the mobile gaming business is expected in the future.

Even with the $330M expense spent in merging of the companies, there are still $170M left.  CJ Netmarble has more than enough funding to begin their new era of investments. For Tencent, it can enjoy the privilege of being able to take Netmarble’s games to the Chinese market in priority.

As Bang has commented in the press conference, this recent investment and business changes ultimately allows CJ Netmarble to make its progress into the global market.