Sega to Merge with Sammy

Korben_Dallas

Zwame Advisor
"Old-school publisher and developer of many of the world's most loved games, Sega Corp., announced today that it plans to merge with up-and-coming publisher Sammy Corp., the long-time pachinko maker and coin-op manufacturer.
A Bloomberg news report indicated that Sammy President Hajime Satomi would head the merged company, but added that the executive isn't sure who will ultimately control it, and that the two companies would unite on Oct. 1, 2003. No Sega of America representatives were able to return our calls for additional information prior to deadline.

While circulated rumors of Sega's potential merger have surfaced repeatedly in the past, few would have guessed that the smaller, less prevalent and yet very solvent Sammy Corp would be the one to partner with Sega. Sammy's current market value is 132 billion yen ($1.1 billion). It reports almost no debt. Sega's market capitalization is 20% higher, with interest, but it bears a debt of 83.6 billion yen.

The new company is likely to retain the name brand and library of Sega's list of beloved of characters and games, even while Sammy absorbs Sega's loss, Satori said.

"Sega's brand name is recognized worldwide, and it would be a shame to discard it," he added.

The newly united company may absorb all of Sega's game-making subsidiaries, the reports said. Satomi added that it would form as either a merger or through the creation of a holding company that would integrate the companies' operations. Sega and Sammy plan to form an integration committee to decide the company's new name, Sega President Hideki Sato's role, and where the company will be headquartered.

Financially, the two companies are on very different footings. Sega's long-term debt includes two issues of convertible bonds worth 56.8 billion yen. Moody's Investors Service gave it a B3 rating, six levels below investment grade. Meanwhile, Sammy has long-term loans of 3.3 billion yen (by end of March last year), with no debt. In the financial year ending March 31 2002, Sammy more than doubled its profit and sales, posting a group net income of 23.9 billion yen on sales of 164.3 billion yen.

Sega made strong earnings in arcade sales in its fiscal first half ended Sept. 30. And Sega had high hopes for its sports games NFL 2K3 and NBA 2K3, but posted weaker-than-expected sales in the face of enormous branding and marketing efforts from Electronic Arts."
fonte: ign.com
 
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