Reuters' Take on Sega/EA/MS Situation
Reuters has also put up a release on the situation between Sega, Microsoft, and Electronic Arts, which you can read more about here. The below release shows that a huge stock uprisal began after Sega reported it would merge with Sammy Corp., the nation’s leading pinball-machine maker, and now EA and Microsoft are looking to buy.
Sega Stock Jumps on Reported Microsoft, EA Bids
TOKYO (Reuters) - Shares in Japanese video game maker Sega Corp soared on Friday after a media report that Microsoft Corp and top U.S. game publisher Electronic Arts Inc were considering billion-dollar takeover bids for the company.
The Asian Wall Street Journal said the U.S. companies wanted to buy all or part of Sega, which is already involved in merger discussions with fellow Japanese game maker Sammy Corp.
The report sparked a buying spree for shares in Sega, which had a market capitalization of 129.4 billion yen as of Friday.
The Journal, quoting people familiar with the situation, said Microsoft and EA were separately exploring the possibility of buying all or part of Sega, famous for its “Sonic the Hedgehog” character, but had yet to hold formal talks.
The sources were quoted as saying no deal was imminent.
The stock rose 15.63 percent, their daily limit of 100 yen, to close at 740 yen in a generally weaker market.
The news emerged two weeks after Sega, Japan’s largest game arcade operator, said it would merge with Sammy Corp, the country’s largest maker of pinball-style ‘pachinko’ game machines, and would abandon plans to restructure on its own.
The paper said either U.S. company could emerge as struggling Sega’s “white knight,” pulling it away from a merger plan that appears rife with difficulties and faces internal opposition.
Analysts said the report appeared to be speculative but it came amid mounting uncertainty over the fate of the merger deal.
Investors in the two Japanese firms have given a thumbs down to the merger plan, sending shares in both to all-time lows.
“Many investors and employees at Sega believe Sammy is not an appropriate partner and that the merger would bring little benefit to Sega. Now, it is not sure if the deal will go through,” Morgan Stanley analyst Shunji Yamashina said.
Yamashina said he would not be surprised if Microsoft bid for Sega since it wants to beef up it game line-up for its Xbox console which in Japan lags behind competitors like Sony Corp’s 6758.t PlayStation 2 and Nintendo Co Ltd’s 7974.OS GameCube.
For EA, such a deal would be less attractive because it makes games similar to Sega’s, Yamashina said.
NO OFFERS
The newspaper said Microsoft had asked at least one U.S. investment bank to investigate ways to buy all or part of Sega.
It said EA had approached Japanese game makers in recent weeks about launching a joint bid for Sega.
Sega said it had not received any offers.
Officials at the Japanese units of Microsoft and EA declined to comment on the report, but a Microsoft spokesman said chairman Bill Gates had not met with Sega when he visited Tokyo this week.
Analysts said Microsoft would have to convince Sega’s biggest shareholder, CSK Corp, before any deal went ahead.
CSK, an information services provider, holds a 22.3 percent stake in Sega and is thought have played a big role in arranging the deal with financially sound Sammy.
Sega has been hurt by the disappointing performance of its consumer videogame operations, especially in the United States, and its shares have lost nearly 70 percent of their value since the end of last March.
Sega reduced its net profit forecast by 90 percent to 50 million yen ($425,000) for the year to March early this month.
The company is expected to announce as early as Friday a reorganization of its U.S. operations that will shed 20 percent of its work force of 450, the Journal said.
The cuts are part of a global restructuring that could lead to additional layoffs around the world, the paper said. ($1=117.72 Yen)
Source: http://www.reuters.com
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