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Gamania rejects merger with South Korean online gaming firm (update)

2012/05/14 21:55:39

Taipei, May 14 (CNA) Taiwanese gaming firm Gamania Digital Entertainment Co. said Monday that it will not merge with Nexon Co., despite the South Korean online gaming giant's attempt to acquire it.

"Based on legal foundations, Gamania is willing to cooperate with all international partners and will welcome investment of any type," the company said in a statement.

"However, Gamania will insist on the independence of our company's operating rights and will absolutely not accept the merger with South Korea's Nexon," it noted.

If foreign companies get their hands into the distribution channels and management resources of Taiwanese firms, it will have an "absolutely negative impact" on the development of the local gaming industry, according to the statement.

Given that it has been running its operation in Taiwan for 17 years, Gamania said, it will continue to maintain its own Taiwanese brand and will strengthen its independent research power to improve the overall performance of Taiwan's gaming industry.

Gamania, which is listed on the Taiwan Stock Exchange, was the first Taiwanese online game brand to expand outside of Taiwan, with branch offices publishing and developing digital entertainment content in Japan, South Korea and China.

Tokyo-listed Nexon began working with Gamania in 2005 to introduce a variety of popular online games, such as MapleStory and KartRider, to Taiwan gamers.

In 2007, Nexon publicly acquired a 10 percent stake in Gamania to further strengthen the strategic alliance and has since upped its holdings to 34.6 percent of Gamania's shares, becoming its biggest shareholder in the process.

"As a major shareholder of the company, Nexon is interested in maximizing shareholder profit," Nexon said in a statement released Monday.

"Our goal is to maximize such benefits not only for specific shareholders, but for all shareholders of Gamania," it added.

In acquiring these shares, Nexon said it made timely reports to the government securities agency in Taiwan and Gamania and issued appropriate public announcements to media outlets. Taiwan's government is currently checking the veracity of those claims.

Regarding the Fair Trade Act, Nexon said it believes that Gamania's market share is less than 25 percent of the overall Taiwanese digital content industry, which includes online games and other forms of digital entertainment.

"Nevertheless, Nexon intends to cooperate fully with any investigation by the Fair Trade Commission with regards to this issue," the South Korean firm said.

According to the Fair Trade Act, any planned merger involving a company with more than a 25 percent market share in a particular field must be reported to Taiwan's authorities.

Local media reported that Nexon held more than 33 percent of Gamania's shares as of the end of March, over 10 percent more than than the holdings of Gamania Chairman and CEO Albert Liu.

The revelation has raised fears among Gamania's other investors, while Economics Minister Shih Yen-shiang said earlier Monday that the government will keep an eye on the case and will offer assistance once it has a more thorough knowledge of Nexon's strategies.

Founded in Seoul in 1994, Nexon reported sales of 1 trillion won (US$900 million) in 2011, making it the first South Korean gaming company to hit this milestone.

Gamania's statement came shortly after the Taipei stock market closed Monday. The company stock finished 3.56 percent higher at NT$32.

(By Jeffrey Wu)