Korea’s NHN Said to Be Among Livedoor’s Final Bidders (Update2)
March 11, 2010, 1:47 AM EST(Adds NHN share price in sixth paragraph.)
By Takahiko Hyuga and Kevin Cho
March 11 (Bloomberg) -- NHN Corp., the owner of South Korea’s biggest Web search engine, is among the final bidders for LDH Corp.’s Livedoor Co. Internet unit, three people with knowledge of the matter said.
LDH, 27 percent owned by Morgan Stanley, has asked for final offers for Livedoor by March 17, the people said, requesting anonymity because talks are private. Livedoor, which operates a Web portal with 30 million users, may fetch as much as 12 billion yen ($133 million), they said.
Buying Livedoor would help Seongnam, South Korea-based NHN accelerate its expansion in Japan, where it runs an online gaming portal and the Naver search engine. Tokyo-based Livedoor, whose businesses include a blog and adult sites, boosted sales 12 percent in the nine months ended Dec. 31 from a year earlier.
“As a late entrant to the Japanese search market, NHN may be considering acquiring an Internet company with a large user base,” Choi Kyoung Jin, an analyst at Shinhan Investment Corp. in Seoul, said by telephone today. Choi has a “buy” rating on the stock. “It would be positive for NHN to expand its business in Japan.”
NHN formed Japanese unit NHN Japan Corp. in 2000. Sales in the country rose to about 11.5 billion yen in 2008 from 5 billion yen three years earlier. The company more than doubled its local workforce in the period to 750 people.
Shares of NHN gained 1.1 percent to 189,000 won on the Korea Exchange, while the benchmark Kospi index fell 0.3 percent.
First Round of Bids
LDH aims to reach a deal to sell Livedoor around April 1, the people said. The company received a first round of bids in January and invited NHN, buyout firm Longreach Group and three other companies to study Livedoor’s finances, the people said.
LDH spokesman Kiyotaka Mura declined to comment, as did NHN’s Won Yun Sik.
Revenue at Livedoor, which employs 360 people, rose to 7.4 billion yen in the nine months through Dec. 31 from 6.6 billion yen a year earlier. Livedoor has about 3.4 million subscribers to its blog service.
Unique visitors to Naver Japan’s Web site increased almost eight-fold to more than 1.8 million in January compared with about 240,000 in July, according to Mirae Asset Securities Co. this week, citing Nielsen NetRatings.
Longreach Group, the buyout firm founded by Mark Chiba, the former president of UBS AG’s investment bank in Japan, bought Japanese mobile-phone content provider Cybird Holdings Co. in 2007 and delisted the company.
Morgan Stanley has increased its stake in the company to 27 percent from 18 percent, according to a Dec. 22 filing from the Japanese company. Goldman Sachs Group Inc. holds 11 percent.
Morgan Stanley invested in Livedoor after the company was delisted in April 2006 as prosecutors charged its founder Takafumi Horie with fraud. Horie faces a 30-month prison sentence.
While LDH posted a loss in the year ended March 31, 2009, it still paid 85 billion yen of dividends to Morgan Stanley and other investors, equivalent to 86 percent of Livedoor’s market value when it stopped trading in 2006.
The sale may free up cash for additional dividends for investors including Morgan Stanley.
--Editors: Philip Lagerkranser, Young-Sam Cho
To contact the reporters on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net; Kevin Cho in Seoul at kcho2@bloomberg.net
To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net; Young-Sam Cho at ycho2@bloomberg.net
