Bandai buys Namco

[AndrewTS 0]

Monday, May 2, 2005 Posted: 0622 GMT (1422 HKT)

 

TOKYO, Japan (Reuters) -- Japanese toy maker Bandai Co Ltd said on Monday it would buy videogame company Namco Ltd in a $1.6 billion deal aimed at surviving intense global competition and sluggish demand in Japan for games and toys.

 

The merger of Bandai, known for its "Power Rangers" and "Gundam" action figures, and Namco, creator of the legendary Pac-Man videogame, would give birth to Japan's second-largest toy and game business group after Sega Sammy Holdings Inc.

 

It also reflects the tough operating environment faced by Japan's toy and game makers given the nation's falling birthrate and the hefty investment required to keep producing hit toys and popular software for next-generation game consoles.

 

In a deal that values Namco at a 10 percent premium to its latest closing stock price, the two companies said they would form a holding company on September 29 in which Bandai would hold a 57 percent stake and Namco the remaining 43 percent.

 

"Amid severe market conditions we decided a merger was the best way to focus our resources in an effort to boost corporate value, expand our businesses and come out on top of the competition," Bandai and Namco said in a joint release.

 

The heads of both companies will hold a briefing at 0700 GMT.

 

Under the agreement, Bandai will swap one of its shares for 1.5 shares in the holding company, which will be named Namco Bandai Holdings Inc. Namco, meanwhile, will exchange one of its shares for one share in the merged firm.

 

Based on Bandai's stock price of 2,325 yen as of 0417 GMT on Monday, the swap ratio values Namco at 1,550 yen, or 144 yen above Namco's close on Thursday of 1,406 yen. The total deal is valued at 170.8 billion yen ($1.63 billion).

 

Tokyo's stock market was closed on Friday for a holiday.

 

Bandai's stock sagged 2.92 percent on the news, while shares of Namco surged 8.82 percent to 1,530 yen.

 

Analysts were generally positive about the merger, noting that there was currently little overlap between Bandai and Namco's operations, which should allow for both companies to complement each other with their respective strengths.

 

Bandai is Japan's biggest toy maker and has been bolstering its position in the game software and Internet content areas. Namco, for its part, is one of the world's top videogame developers and a major producer of arcade machines.

 

The two companies hope the merger will help them tap the fast-growing market for games and other content delivered over broadband networks to mobile phones.

 

"Basically, this is a positive step for both firms," said Takeshi Tajima, a consultant at BNP Paribas. "This isn't a merger where one is rescuing the other. Each will bring strengths to the table and together they can work to address any weak points."

 

Tajima said the industry was ripe for consolidation amid sluggish sales of toys and game software in Japan. Japanese videogame developers are also losing market share overseas to foreign rivals such as Electronic Arts Inc., he said.

 

"The current market environment is certainly pushing players in the direction of forming ties," Tajima said.

 

Bandai estimates its sales at 270 billion yen ($2.57 billion) for the business year ended on March 31. Combined with Namco's estimated sales of 178.5 billion yen, the new group would leapfrog videogame maker Konami Corp and be second only to Sega Sammy in Japan's toy and game industry.

 

Sega Sammy sees its 2004/05 sales at 528 billion yen.

 

The new group would dwarf struggling toy maker Takara Co Ltd and other smaller industry players such as Taito Corp, Tomy Co. , Square Enix Co Ltd, Capcom Co Ltd and Koei Co Ltd.

 

But if history is any guide, forming and keeping ties in Japan's game and toy industry is not an easy task.

 

In the past both Bandai and Namco have tried to merge with Sega but failed. Sega merged with Sammy last year.

 

More recently, Konami said last week that it had sold its 22 percent stake in Takara to Japanese mobile content provider Index Corp, looking to distance itself from the loss-making Takara and focus its resources on online games.

 

*doesn't personally see much good in Japcclaim acquiring Namco*

[Highland 0]

They'll keep the Namco name if they're smart, especially for selling games over here.

[razazteca 0]

So this means that we will start seeing some $8 Pac-Man toys to be sold in EB Gamestop stores soon or a possible tv series?

[Lightning Flik 0]

NO!!!

 

My Tales of... Series will now all have shitty translations! DAMN YOU BANDAI~!!!

[Jobber of the Week 0]

Seems to me that this gives Namco the freedom to do their thing without worrying about blipping out of existance tomorrow.

 

With the EA-style consolidation going on among developers, I don't mind that.

[El Psycho Diablo 0]

Bandai does do a lot of good stuff, just none of it ever makes it over here.

 

The SD Gundam G Generation and Super Robot Wars series, particularly..both are turn-based strategy games, but fairly different in execution. Unfortunately, SRW won't ever make it over. Cheap bastards.

 

The best thing about this is that Namco made the latest Gundam action game, which just happens to be worlds above anything Bandai's done. Maybe they'll get to make them from now on..

[AndrewTS 0]

Bandai does do a lot of good stuff, just none of it ever makes it over here.

 

The SD Gundam G Generation and Super Robot Wars series, particularly

Renegade is a big fan of their Naruto games.

 

GC one probably will never make it, but the PS2 one might.

 

If not, they might end bringing the DS/PSP games here if the dubbed eps are a hit.

[Guest CronoT]

Namco's been making some good stuff recently. The Star Fox Assault game and the Soul Calibur II multi-port exclusives were a big hit. I still laugh when I think about how bad the GC version of Soul Calibur II outsold the PS2 version more than 2-to-1.

 

Just goes to prove how many Link fans there are out there.

 

I've got my copy.

[AndrewTS 0]

Namco's been making some good stuff recently. The Star Fox Assault game and the Soul Calibur II multi-port exclusives were a big hit. I still laugh when I think about how bad the GC version of Soul Calibur II outsold the PS2 version more than 2-to-1.

 

Just goes to prove how many Link fans there are out there.

 

I've got my copy.

Well, half of Assault is kinda "bleh."

 

and SCIII is PS2 exclusive. Bleh to that.

 

Maybe Bandai will have Namco reconsider the SCIII thing, at least for GC. They're tight with Nintendo in Japan, after all.

[Anya 0]

I still laugh when I think about how bad the GC version of Soul Calibur II outsold the PS2 version more than 2-to-1.

Um, no. It's really close and in Japan PS2 outsold GC version.