Namco Says It Is in Merger Talks With Rival Sega (Update3)
By Yoshifumi Takemoto
Tokyo, April 17 (Bloomberg) -- Namco Ltd., Japan's No. 2 maker of arcade video-game machines, said it is in talks to merge with Sega Corp., potentially thwarting plans by its larger rival to combine with Sammy Corp., a maker of pachinko slot machines.
``We've been in talks since last year about expanding our relationship, including a merger,'' Namco spokesman Shin Hasuya said. Sega's announcement in February that it would combine with Sammy came during a suspension of talks with Namco, Hasuya said.
A merger of Sega and Namco would create a company with a combined market value of 209 billion yen ($1.74 billion) and sales of 358 billion yen. The company, which would also bring together Sega's Sonic the Hedgehog game character with Namco's Pac-Man, would be Japan's dominant provider of arcade game machines.
``More offers would mean more options for Sega to pick the best deal,'' said Teruhisa Ishikawa, a manager at Izumi Securities Co. Sega's shares have declined 30 percent since Feb. 13 when the video-game maker said it would merge with Sammy.
Shares of Sega and Namco were suspended from trading as of 8:20 a.m., the Tokyo Stock Exchange said in a release after the merger talks were earlier reported by the Nihon Keizai newspaper.
Options
Sammy is going ahead with plans to join with Sega, said Tetsuya Hasegawa, a spokesman in the pachinko machine maker's investor relations department. The companies will sign documents officially approving their combination in May, he said.
Tokyo-based Sega confirmed in a statement to the Tokyo Stock Exchange that Namco has approached it with a proposal to merge. The video-game maker, which scrapped its Dreamcast game console in March 2001 to concentrate on software development, is considering its options, the company said.
Under Namco's proposal both companies would operate under Sega's name and consolidate software development, maintenance and distribution and intellectual property, the Nihon Keizai report said. In addition, Namco would gain in international markets by combining the overseas sales routes of both companies, it said.
``Sega is expected to have more synergy with us'' than with Sammy, Namco Managing Director Keiji Tanaka told Bloomberg News. He declined to provide further details.
Board Meeting
Sega will consider the proposals from Namco, Sammy and a competing offer from Redwood City, California-based Electronic Arts Inc. at a board meeting next week, the Nihon Keizai said.
Sega's shares surged 16 percent on Feb. 28 when the Asian Wall Street Journal said Electronic Arts, the largest maker of video games in the U.S., and Microsoft Corp. were considering separate bids for Sega.
Tokyo-based Sega has denied that it's seeking an investment from Electronic Arts. The U.S. company has also distances itself from discussions about the fate of its Japanese rival.
``Contrary to reports, we've never indicated an interest in acquiring these assets,'' said Jeff Brown, a spokesman for Electronic Arts.
Last Updated: April 16, 2003 21:24 EDT
By Yoshifumi Takemoto
Tokyo, April 17 (Bloomberg) -- Namco Ltd., Japan's No. 2 maker of arcade video-game machines, said it is in talks to merge with Sega Corp., potentially thwarting plans by its larger rival to combine with Sammy Corp., a maker of pachinko slot machines.
``We've been in talks since last year about expanding our relationship, including a merger,'' Namco spokesman Shin Hasuya said. Sega's announcement in February that it would combine with Sammy came during a suspension of talks with Namco, Hasuya said.
A merger of Sega and Namco would create a company with a combined market value of 209 billion yen ($1.74 billion) and sales of 358 billion yen. The company, which would also bring together Sega's Sonic the Hedgehog game character with Namco's Pac-Man, would be Japan's dominant provider of arcade game machines.
``More offers would mean more options for Sega to pick the best deal,'' said Teruhisa Ishikawa, a manager at Izumi Securities Co. Sega's shares have declined 30 percent since Feb. 13 when the video-game maker said it would merge with Sammy.
Shares of Sega and Namco were suspended from trading as of 8:20 a.m., the Tokyo Stock Exchange said in a release after the merger talks were earlier reported by the Nihon Keizai newspaper.
Options
Sammy is going ahead with plans to join with Sega, said Tetsuya Hasegawa, a spokesman in the pachinko machine maker's investor relations department. The companies will sign documents officially approving their combination in May, he said.
Tokyo-based Sega confirmed in a statement to the Tokyo Stock Exchange that Namco has approached it with a proposal to merge. The video-game maker, which scrapped its Dreamcast game console in March 2001 to concentrate on software development, is considering its options, the company said.
Under Namco's proposal both companies would operate under Sega's name and consolidate software development, maintenance and distribution and intellectual property, the Nihon Keizai report said. In addition, Namco would gain in international markets by combining the overseas sales routes of both companies, it said.
``Sega is expected to have more synergy with us'' than with Sammy, Namco Managing Director Keiji Tanaka told Bloomberg News. He declined to provide further details.
Board Meeting
Sega will consider the proposals from Namco, Sammy and a competing offer from Redwood City, California-based Electronic Arts Inc. at a board meeting next week, the Nihon Keizai said.
Sega's shares surged 16 percent on Feb. 28 when the Asian Wall Street Journal said Electronic Arts, the largest maker of video games in the U.S., and Microsoft Corp. were considering separate bids for Sega.
Tokyo-based Sega has denied that it's seeking an investment from Electronic Arts. The U.S. company has also distances itself from discussions about the fate of its Japanese rival.
``Contrary to reports, we've never indicated an interest in acquiring these assets,'' said Jeff Brown, a spokesman for Electronic Arts.
Last Updated: April 16, 2003 21:24 EDT
