Netmarble Focuses on Securing Cash to Acquire SpinX... A Bold Move for Global Leap

[Asia Economy Reporter Kang Nahum] Netmarble is focusing on securing cash to acquire SpinX, a social casino game company. The plan is to diversify its game portfolio by adding the social casino genre to its existing main genre, RPG, but it remains to be seen whether the company can achieve the expected results despite the significant financial burden.

According to industry sources on the 16th, Netmarble sold 3,218,320 shares of Kakao Games through off-hours block trading on the 13th. The disposal amount reached 250 billion KRW.

Prior to this, on the 10th, Netmarble sold 6 million shares of Kakao Bank (worth 430 billion KRW) and also executed a short-term loan of 1.77 trillion KRW from financial institutions.

This cash securing effort appears to be aimed at raising the 2.5 trillion KRW needed for the SpinX acquisition. SpinX, established in 2014, is a social casino game specialist company that offers games such as Cash Frenzy, Latcher Slots, and Jackpot World. Its strengths include conducting abundant event promotions, maintaining business targeting casual users, and rapid updates.

Netmarble focused primarily on SpinX's growth potential. Lee Seungwon, CEO of Netmarble, stated, "The social casino game genre is continuously growing globally, and SpinX is the fastest-growing company in this genre. As Netmarble's casual game lineup expands, our global game competitiveness will be further strengthened."

For Netmarble, which showed sluggish performance in the first half of this year, acquiring SpinX is also a strategic move to improve results. Among the so-called 3N major game companies, Netmarble experienced the largest decline in operating profit in Q2. On a consolidated basis for Q2, it recorded sales of 577.2 billion KRW and operating profit of 16.2 billion KRW, down 15.8% and 80.2% respectively compared to the same period last year.

EBITDA (earnings before interest, taxes, depreciation, and amortization) for Q2 was 41.8 billion KRW, down 47.9% from the previous quarter and 61.8% from the same period last year. The cumulative amount for the first half was 122.1 billion KRW, a 22.7% decrease compared to the same period last year.

Netmarble believes that the poor performance can be offset if new releases such as "Marvel Future Revolution" and SpinX's strong performance continue. CEO Lee said during the earnings conference call on the 11th, "The social casino genre is expected to grow steadily. SpinX anticipates annual sales between 700 to 750 billion KRW in 2021, and consolidated results will be fully reflected from Q4."

However, financial burdens such as an increase in debt ratio due to the SpinX acquisition also follow. Netmarble's debt ratio has already increased from 19.4% in 2018 to 45.5% last year. With this short-term borrowing, the debt ratio is expected to rise to the 80% range.

Netmarble will pay about 2 trillion KRW, which is 80% of the acquisition price, by the 17th of next month, and the remaining 20% (about 500 billion KRW) will be paid over four years. Since Netmarble's cash and cash equivalents on a separate basis for Q1 amount to only 230 billion KRW, there is also a possibility of additional stock sales held by the company.

This content was produced with the assistance of AI translation services.