Expectations for Active Mergers and Acquisitions (M&A)
NCSoft has recruited an investment expert as co-CEO to escape its slump. This marks the company's first-ever dual CEO system since its founding. Despite the release of the highly anticipated title "Throne and Liberty" (hereafter TL), the stock price plummeted, highlighting the need for a turnaround. NCSoft is expected to pursue a rebound through active mergers and acquisitions (M&A).
On the 11th, NCSoft announced that it had selected Park Byung-moo, CEO of VIG Partners, as a candidate for co-CEO. This recruitment aims to discover new growth engines and strengthen the company's leap to becoming a global enterprise.
Since 1997, NCSoft has been operated under the sole leadership of founder Kim Taek-jin. However, as business performance deteriorated this year, the company launched the "Change Management Committee" and has been discussing organizational and decision-making system reforms, cost structure improvements, and new growth engine enhancement plans as part of its efforts to improve. Park is expected to be officially appointed after the board of directors and shareholders' meeting early next year.
Park, who attended the same high school (Seoul Da-il High School) and university (Seoul National University) as CEO Kim, has maintained ties with NCSoft since 2007 through roles as an outside director and inside director. Since being registered as an inside director in 2013, he has served as a management advisor to NCSoft. Although he was reappointed last year as a non-executive director with one year remaining on his term, he has now been selected as a candidate for co-CEO.
He is an investment expert. After completing the 15th class of the Judicial Research and Training Institute in 1985, he served as a naval legal officer and then entered the legal profession as a lawyer at Kim & Chang law firm. Park, who specialized as a corporate M&A lawyer, stepped into management in 2000 as CEO of Plenus Entertainment (formerly Locus Holdings). He later served as Korea representative and partner of TPG Asia (Newbridge Capital), CEO of Hanaro Telecom, and CEO of VIG Partners.
The background to NCSoft's transition to its first-ever dual CEO system since its founding is rooted in urgency. NCSoft has experienced consecutive poor performances. The new title TL, developed with hundreds of billions of won invested over five years, has received below-expectation responses from the market. The day after TL's release, NCSoft's stock price fell by 8.7%. It is now a time when factors beyond gaming are needed for a rebound.
NCSoft is expected to emphasize M&A as a method to improve performance and stock price, with Park leading the efforts. While competitors have actively pursued investments or acquisitions in recent years, NCSoft has remained quiet. The last acquisition was in 2012, when it acquired developer Ntreev Soft for 108.5 billion won.
As of the third quarter this year, NCSoft holds approximately 2.4 trillion won in liquid assets. Liquid assets include cash, cash equivalents, or short-term financial products that can be converted into cash within one year. This means NCSoft has sufficient firepower for M&A. Hong Won-jun, NCSoft's Chief Financial Officer (CFO), said during the third-quarter earnings conference call regarding M&A, "Rather than conducting multiple small-scale M&As, we are carefully discussing strategically meaningful targets of a certain scale."
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