Sega cancels merger with Sammy... Who will merge with them? EA, MS, Namco?

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Storm

Diamond Member
Nov 5, 1999
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Sega Cancels Merger Plans With Sammy, Nikkei Reports

Tokyo, May 8 (Bloomberg) -- Sega Corp., Japan's biggest maker of arcade video games, abandoned plans to merge with pinball machine maker Sammy Corp. after the companies failed to agree a price, the Nihon Keizai newspaper reported, without saying where it got the information.

Sega and Sammy will make separate statements today, said Fumio Deguchi, a Sammy spokesman. A telephone call to Sega's public relations staff was not immediately answered.

Tokyo-based Sega's sales slumped after its 2001 exit from the video-game hardware business to concentrate on software, leading it to examine offers from merger partners. Microsoft Corp. and Electronic Arts Inc. considered bids, the Asian Wall Street Journal reported Feb. 28. Sega also has had an approach from Namco Ltd., Japan's second-biggest maker of arcade video games, which some analysts believe may be a better fit.

Sega ``has potential for a comeback,'' with the right partner, said Arvind Bhatia, a video game analyst at SWS Securities Inc. in Dallas, Texas, who doesn't have a rating for Sega. ``Namco would be a better fit in the long-run'' so the end of the Sammy discussions may be positive for Sega, he said.

Shares of both Sega and Sammy were suspended from trading as of 8:20 a.m. on the Tokyo Stock Exchange. Namco shares fell 3.7 percent to 1,730 yen as of 9:18 a.m.

Capital Needs

Sega, which lost money for the five years from 1998, expects to have had a 500 million yen ($4.3 million) profit in the twelve months to March 31. Its shares have fallen by three quarters in the last year and the game maker had almost 80 billion yen in interest-bearing debt at the end of March.

Sega wants a partner ``because it needs more capital, it needs to be financially stronger,'' said Bhatia. ``Development costs and marketing costs are going up in the video-game world, and you need someone who understands that and who understands this is a long-term growth industry,'' he said.

Electronic Arts, the largest U.S. games maker, and Microsoft, which makes the Xbox games console, have declined to comment on whether they have made any approach to Sega. Microsoft Chairman Bill Gates said May 6 he expects his company to make fewer acquisitions and to focus on developing its own products.

Sega President Hideki Sato said last week the company should be able to finish an audit of Sammy's financial records ahead of a May 9 deadline set by Namco for a reply to its interest in merging with Sega.

Before the Namco approach was made public in April, Sammy President Hajime Satomi said Feb. 13 that he expected to merger of Sega and Sammy to take place on Oct. 1. He didn't say who would control the company.

CSK Corp., Sega's biggest shareholder, favors a merger with Sammy, the Kyodo news agency said in a separate report on May 3. Sammy's main product line is pachinko machines, a type of arcade pinball popular in Japan.

Japanese video game Enix Corp. bought out rival Square Co. to form Square Enix Co. on April 1, as part of a broad consolidation in the $20 billion annual video game industry.

Last Updated: May 7, 2003 20:41 EDT
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Personally I hope they merge with Namco...
 
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Angrymarshmello

Lifer
Apr 5, 2000
13,256
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Namco and Sega merging would make a hell of a video game company. I don't believe the part where Gates wants to develop games in-house though - they could use the characters and titles Sega could bring to build a strong base
 
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SportSC4

Golden Member
Aug 29, 2002
1,152
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I want to know what they were thinking by merging with Sammy... just baffling. I'm glad it didn't go through.

The worst thing for Sega would be a merger with EA. EA has simply no respect for companies it picks up, they would dry hump Sonic to death (and keep on doing so) and trash the engineering section of Sega (which is very important, if not more than the software side). EA is a death kiss.

MS wouldn't have much to gain. Sega makes much more money by making games for multiple platforms, once they start making only for 1 system then watch sales plummet while XBox increases sales a little. XBOX is content with PC hardware and Sega's brilliant AMA section would go to waste.

Namco would have been interesting but makes as much sense as Enix and Square combining (which in the long run isn't much... at least to me).

I'd love to see SNK and Sega merge, especially considering the rumors of SNK coming out with a new Neo-Geo arcade type machine (multiple games in one machine, can last forever and a day). But SNK simply does not have the capital and currently rely on Pachinko type machines and carnival picture booths for profit :(

Nintendo and Sega would be pretty good. Sega would be allowed to continue making great games and give the big N an entry point for arcades and future tech for home systems. But I doubt the 'N' would allow the better of those games on other systems and you know... the history between these two companies. But Sega would definitely have the capital that they desire.

Sony and Sega... Sony already has good research so Sega's AMA section would either be integrated into Sony. Sony may also still let them publish for other systems, at least for the time being.

just what i think, no facts.
 
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Glitchny

Diamond Member
Sep 4, 2002
5,679
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Originally posted by: SportSC4

Nintendo and Sega would be pretty good. Sega would be allowed to continue making great games and give the big N an entry point for arcades and future tech for home systems. But I doubt the 'N' would allow the better of those games on other systems and you know... the history between these two companies. But Sega would definitely have the capital that they desire.

Sony and Sega... Sony already has good research so Sega's AMA section would either be integrated into Sony. Sony may also still let them publish for other systems, at least for the time being.

just what i think, no facts.
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Nintendo and sega would be great two amazing companies that started the whole console war working together to make even better games than they do already... I dont see sony letting sega go multiplatform though.. they kinda held square back and still are mostly only a few titles form square have been ported or multiplatform... i dont think sony would let sega touch the other systems
 
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