이 기사는 2019년 12월 19일 08:00 thebell 에 표출된 기사입니다.

South Korea's mobile game maker Netmarble has reportedly dropped its plan to acquire Woongjin Group's water purifier rental unit Coway.

According to the M&A industry sources on December 15, Netmarble internally has decided to stop its attempt to acquire Coway. Netmarble has conducted detailed due diligence while negotiating the price with Woongjin Group since it was named the preferred bidder for Coway on October 14. However, it is said the game maker abandoned the plan because synergies of the acquisition isn’t likely to be as strong as it anticipated and two parties fail to narrow the valuation gap.

Since early November, both companies have set a date for negotiations to enter into a share purchase agreement (SPA) as Netmarble’s due diligence nears the finish line. Despite different views on Coway’s valuation, both parties didn’t give up on the negotiation.

After postponing the negotiation three times, it seemed they could finally sit at the negotiation table on December 6, but it ended in failure again due to Netmarble’s absence. On the day, Netmarble reportedly told Woongjin Group that it will review from the beginning whether it will acquire the company or not. “Netmarble recently has made its final decision not to acquire Coway. [The company] will announce this in the near future,” said an investment banking industry source.

Speculation has arisen in the market that the deal might have collapsed because two parties haven’t signed an agreement two months after the selection of the preferred bidder. However, Netmarble denied the speculation and it actually has focused on planning to finance its acquisition. The game maker has explored many possibilities to finance its acquisition, including corporate bond issuance.

The mobile games maker, which initially was not included in the seller's shortlist, joined the final bidding held in October in an unexpected move.

Netmarble initially offered 1.84 trillion won to acquire 25.08 percent stake in Coway. The company begun to look for advisory firms after it was selected as the preferred bidder to conduct due diligence, and re-offered 1.75 trillion won to the seller due to some discount factors following its due diligence. The Group's education service unit Woongjin Thinkbig acquired a 25.08 percent stake in Coway for around two trillion won in March. Woongjin would not budge at a price lower than the amount in order not to sell at a loss.

Netmarble’s billionaire founder Bang Jun-hyuk’s plan to bet big on the growth potential of subscription-based rental services is likely to be withdrawn in two months. Prior to the Coway deal, Netmarble botched its attempt to buy rival Nexon.

If the negotiation does break down, the Woongjin Group is expected to negotiate with financial investors. A person with knowledge of the matter said that a financial investor who showed interest in the deal from the beginning is expected to participate in the acquisition deal.

(By reporters Kim Hye-ran and Cho Se-hun)