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Sammy purchases controlling stake in Sega

  • 08-12-2003 7:56pm
    #1
    BLITZ_Molloy
    Closed Accounts Posts: 1,947 ✭✭✭


    CSK To Sell Entire Stake In Sega To Sammy
    Mon Dec 8, 1:24 AM ET


    TOKYO -(Dow Jones)- CSK Corp. said Monday it will sell almost its entire stake in video game software maker Sega Corp. to pachinko gaming equipment maker Sammy Corp. , a move that may trigger realignment in the game industry.

    CSK, which now holds 39,148,688, or 22.4%, of Sega's outstanding shares, will sell 39,148,600 of the shares to Sammy for Y45.33 billion. CSK is the top shareholder in Sega.


    The transaction will leave CSK with a special profit of Y17 billion on a group basis for this fiscal year ending March 31.


    Sammy President Hajime Satomi told reporters at a press conference that his firm may take an additional stake in Sega in the future.


    The latest move comes after Sega's merger talks with Sammy failed in May as Sammy felt the two firms lacked synergies. Similar talks between Sega and another video game maker, Namco Ltd. , came to an end after Sega didn't reply to Namco by a set deadline.


    Since then, Sega has said it won't consider business mergers or tie-ups with game developers in Japan, but it may mull allying with foreign game companies.


    The cost of producing video games has escalated as game technology has become more sophisticated, leading some firms in the sector to seek mergers to defray development, marketing and advertising costs.


    For instance, two of Japan's biggest game makers, Square Co. and Enix Corp. merged April 1 to create Square Enix Co. (J.SQX or 9684).


    Sammy said in a press release it has yet to gauge the impact on its earnings of its purchase of Sega shares.


    -By Hiroyuki Kachi, Dow Jones Newswires; 813-5255-2929; hiroyuki.kachi@dowjones.com




    Now this is a surprise. I thought Sammy wouldn't touch them after they said Sega had betrayed and embarassed them.

    I tend to see this in a pretty positive light. I think its fair to say that Sega's senior management team are a bit rubbish. I can understand why Sammy didn't want to merge with a team like that on equal terms. They'd run the company into the ground like they've been doing for the last 10 years.

    Sega's strenght is their talented creative people. Combine that with Sammy's excellent management and cash reserves and I like the idea alot.

    Development costs are going to skyrocket next generation. Sega was going to need to compromise and make big changes anyway. I think that Sammy could put them in a position to compete with the big players like EA and Konami on equal terms.


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