http://money.cnn.com/2004/05/18/news/international/sega_sammy.reut/index.htm

Sega, Sonic series sold to Sammy

Japan' s No. 1 slot machine company will acquire Sega for $1.4B as it expands into video game market.
May 18, 2004: 7:39 AM EDT

TOKYO (Reuters) - Japan' s biggest maker of slot machines, Sammy Corp., will acquire video game developer Sega Corp. in a stock deal worth $1.4 billion, the two companies said on Tuesday.

The acquisition, which values Sega at a 21 percent premium based on Reuters calculations, will allow Sammy to use Sega' s strong brand and library of hit games, such as the popular Sonic series, to boost its presence in the arcade game market.

Sammy had already once failed to take over Sega last year.

The combined companies' annual sales will exceed ¥440 billion, or $3.84 billion, overtaking rival Konami Corp.

The two companies said they would create a new holding company, Sega Sammy Holdings Inc, of which Sammy will hold a 95.3 percent stake.

Each share of Sammy will be swapped for one share of Sega Sammy, while each share of Sega will be swapped for 0.28 share.

The two companies aim to close the deal Oct. 1 with Sammy Chief Executive Hajime Satomi heading the new company. The firms' respective stocks will be withdrawn from the Tokyo Stock Exchange on Sept. 27.

Shares of Sega closed up 1.01 percent at ¥1,000 and Sammy ended up 4.84 percent at ¥4,330 ahead of the announcement. The Nikkei stock average rose 1.96 percent.

The news follows Satomi' s appointment as Sega chairman in February. Sammy acquired 22.4 percent of Sega last December in a move that was seen as the first step in taking a controlling stake.

Merger talks between the two companies broke down once last year due to disagreements over management style and other terms of the integration.

Satomi told Reuters in March that he was targeting a profit of $1 billion between Sammy and Sega in the 2005-2006 business year.

Sega afternoon reported an annual net profit Tuesday that nearly tripled on the back of strong performances by its arcade business but forecast lower earnings this year.

Sammy also reported a 40 percent increase in annual net profit Tuesday on a 52 percent rise in sales. It forecast a higher net profit for the current business year.


My take on this:

Sammy has several games planned for the X-Box/PS2, publishes one of the most successful 2D fighters since Street Fighter and KOF, and also is very eager to see Sega go multi-platform with their games.

Granted no one wants to hear of company take-overs, but remember, Sega was never truly free. Before Sammy, before Microsoft, Sega was owned by a research company called CSK -- who wasn' t doing much to help Sega out of depth.

Yeah, Sammy is going to use Sega' s image/franchises to push Sammy' s products, but Sammy has shown zero interest to take Sega out of videogame development entirely. Also, Sammy very much wants Sega to return to full profit. More money for Sega = better titles.

Yeah, this could all turn out horribly, but I don' t think it' s time to start putting the nails in the coffin already.

So um -- did Sega announce anything big at E3?

I dont like this and i just hope they keep the SEGA brand. SEGA will probably be force to publish all of SAMMYs games. As long as they keep the name and come out with games that i really like i will be ok. I better not see SAMMY in SEGA games, they should have gone with Namco when they had the chance.

It' s all about synergies, baby!

It' s probably a good move although I hope it A) doesn' t stifle creativity within Sega' s development studios and B) cause a mass exodus of Sega personnel (which is probable as the Japanese can be very funny when it comes to mergers and working for different people).

Meh...as far as I' m concerned, Sega' s been going downhill since the Genesis. So I don' t really care too much.

I agree, they should have gone with Namco... Namco was even willing to phase out their name and fall under the Sega umbrella (go figure).

Plus Namco and Sega have SOOOOO much more in common. Both are makers of digital crack (aka highly addicting games). The only thing Sammy said that I liked was that they wanted Sega to remain focussed on arcade games.

Yes a merger with NAMCO would surely have been better for Sega.

Honestly, I don' t see how a merger between Sega and Namco would have benefitted either company that much. Neither Sega nor Namco are exactly ranking in the dough at the moment. Of course they' re not going out of business any time soon, but I question how powerful their combined force would be. I doubt I would have any more faith in their titles being better gameplay wise.

I was thinking more of how a Sega Namco merger would have benefitted gamers ;). They both share very similar ideologies and it always felt as if Namco was the Yang to Sega' s Yin ;)

I think the thing that' s so appealing about a Sega Namco merger is that both companies have so much in common that the transition could be a lot smoother.

I' ve heard many people say how much of a dream union a Sega and Nintendo marriage would be, and while it might initially seem like a great union, both companies are just too different, which I guess could work to Nintendo' s advantage by adding that much needed bit of diversity to the Nintendo brand.

I doubt I would have any more faith in their titles being better gameplay wise.

So you' re saying you' d have more faith in Sega Sammy titles being better gameplay wise after the merger? ;)

Having Sega with sammy just seems weird, sega has been sega, it just doesn' t seem right!