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Surprise shake-up for Sega
Sammy Corp. buys 22.4 percent stake to become biggest holder in video game company.
December 8, 2003: 2:39 PM EST
By Chris Morris, CNN/Money Staff Writer

NEW YORK (CNN/Money) - Seven months after seeing its merger offer to Sega rejected, a Japanese entertainment company has become the largest shareholder in the video game publisher.

Sammy Corp., best known in Japan as the maker of "pachinko" pinball tables, has acquired a 22.4 percent position in the company from CSK Corp. Sammy, which previously held just 100,000 shares of Sega, bought another 39,148,600 for 43.5 billion, or about $406 million.

Sammy and Sega announced plans to merge in February, but abandoned those three months later when they were unable to agree on a buyout price. Sega also discussed merging with fellow video game publisher Namco, but failed to reach a deal.

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John Rowe, president of Sammy's U.S. division, said there are no plans for any layoffs or cancellation of any in-development titles at this point.

"There are not any significant plans to change [Sega's] business or operations substantively or in any major way," he said. "We have to proceed slowly and carefully and ... figure out ways in which the two companies can help each other."

Negotiations with CSK started in the last 90 days, though Sega was not informed the deal was imminent until last week, said Rowe.

Sammy may not be through buying Sega stock, either.

"At this point, I would say we are looking at all possibilities involving this investment - and expansion of our holdings could happen," said Rowe.

Sammy does not have a strong U.S. presence and is not a well-known name in the video game world. In Japan, it is known for its pachinko pinball machines, vertical gambling machines that are a mix of slot machine and American pinball. The company has been looking to expand into other areas, with a special interest in video games. Over the last two years, it has opened a game development studio in California.

Sega, best known for its Sonic the Hedgehog games, recently returned to profitability after years of losses.  Top of page




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