Could Nexon buy EA? Rumor floats, stock soars
Electronic Arts stock climbs on rumor it may get bought by South Korea's Nexon
Shares of Electronic Arts Inc. got a boost Thursday after rumors floated that a Tokyo-based online game company was thinking about buying the U.S. video game maker.
THE SPARK: Bloomberg said in a report citing South Korean business daily Maeil Business Newspaper that Nexon Corp., a South Korean company with headquarters in Japan, contacted EA about a possible buyout. Both EA and Nexon issued statements saying they don't comment on rumor or speculation.
BACKGROUND: Though not widely known in the U.S., Nexon is a large online game company with more than 3,400 employees. It pioneered the free-to-play business model for online games that's now used by Zynga Inc. for its popular Facebook games. Nexon's games, mostly played in Asia, are more immersive and complex than your typical "FarmVille." The company makes money by charging for virtual items and experiences in its games. In 2011, it earned 25.7 billion yen ($256.9 million) and revenue of 87.6 billion yen ($1.13 billion).
EA, whose fiscal year ended in March, is expected to report revenue of $4.17 billion for the full year.
Owen Mahoney, Nexon's chief financial officer, had previously worked as a senior vice president at Redwood City, Calif.-based EA, where he was responsible for acquisitions among other things.
SHARE ACTION: EA's stock rose 91 cents, or 6.1 percent, to $15.92 in afternoon trading. If Nexon did want to buy EA, now might be a good time — the stock has been trading near its 52-week low of $14.48.
Still, it would be tough. Nexon is larger than EA but not by much. EA's market cap is about $5.3 billion. Nexon, which trades on the Tokyo Stock Exchange, has a market capitalization of about $8.5 billion.
