Netmarble selected as preferred bidder to buy Woongjin Coway

October 14, 2019

AEN20191014003352320_01_i_P4 AEN20191014003352320_02_i_P4(Yonhap) — Netmarble Corp., South Korea’s top mobile gaming company, said Monday it has been chosen as the preferred bidder to buy Woongjin Coway Co., the country’s largest home appliance rental service provider.

Netmarble will acquire a 25.08 percent stake in Woongjin Coway if the deal is completed. Woongjin Group put its water purification making unit up for sale in June to improve its financial status.

Netmarble reportedly offered some 1.8 trillion won (US$1.5 billion) to buy Woongjin Coway.

Netmarble and the U.S. private equity firm Bain Capital were the two final bidders for Woongjin Coway after major players, such as SK Networks Co., which entered the preliminary bidding pulled out of the auction.

Netmarble said it was hoping for a new growth engine with Woongjin Coway’s rental platform. Woongjin Coway is currently the No. 1 player in the water purifier and air purifier rental market, and is estimated to have more than 7 million customers, with 6 million in South Korea.

“With Netmarble’s technologies, Coway can become a major player in the so-called subscription economy market,” Netmarble Vice President Seo Jang-won said. “We’ll combine our user big data and operation know-how from the gaming business to all Coway devices.”

Market watchers said Netmarble’s acquisition of Woongjin Coway is not expected to deliver big synergy in the short term but will enable the company to secure stable cash flow.

Netmarble saw its operating profit plunge 50.8 percent on-year to 67.1 billion won in the first half of the year, while sales dropped 0.4 percent on-year to 1 trillion won. Woongjin Coway, meanwhile, posted sales of 1.4 trillion won and an operating profit of 273.4 billion won in the first half of the year, all record highs for the company.

“Netmarble entered the bid to diversify its business portfolio and stabilize its performance,” said Park Shin-ae, an analyst at KB Securities Co. “Netmarble will not have a problem in financing the deal, but uncertainties surrounding competitiveness of its games business and future merger and acquisition deals can expand.”

Shares in Woongjin Corp., the group’s holding company, spiked 29.89 percent to close at 1,760 won, while Netmarble fell 0.75 percent to end at 92,100 won on the Seoul bourse.