Sammy takes over Sega

[A Black Falcon]

This is about Sammy's first announcement after the stock purchase a few days ago.

http://story.news.yahoo.com/news?tmpl=st...sammy_dc_1

Sammy CEO: Deal Adds to Muscle in Arcades

Wed Dec 10, 4:55 AM ET

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By Kunihiko Kichise and Daisuke Wakabayashi

TOKYO (Reuters) - The head of Sammy Corp., Japan's biggest maker of slot machines, said on Wednesday it can work with video game maker Sega Corp., in which it became the biggest shareholder this week, to boost its presence in the arcade game market.

Sammy, which also makes pinball-style "pachinko" game machines, agreed to buy 39.1 million shares in Sega, known for its "Sonic the Hedgehog" video games, for 45 billion yen ($420 million) on Monday from information services firm CSK Corp

The two had broken off merger talks in May due to disagreements over management and other integration terms, but Sammy Chief Executive Hajime Satomi said the biggest sticking point was trying to reach an agreement with CSK, Sega's biggest shareholder at the time.

"CSK wanted to do whatever possible to get the highest price for Sega, so it really didn't work out then," Satomi told Reuters in an interview. "But I told CSK to come to me first when it really wanted to unload Sega."

Sammy paid 1,158 yen for each Sega share, a 13 percent premium to Monday's closing price. Shares in Sega had risen more than 70 percent since Sammy pulled out of talks in May.

The new stake will be added to the 100,000 Sega shares, or 0.06 percent of shares outstanding, it acquired in 1999. It is now the biggest shareholder in Sega. Investment bank Goldman Sachs is Sega's third-biggest shareholder with a 3.5 percent stake.

Satomi, who personally holds nearly 25 percent of Sammy's shares, said taking a majority share in Sega was one of many options he had wanted to consider, including possibly setting up a holding company or a full merger.

"I can't imagine this happening, but if our vision does not agree with that of Sega then we might have to consider taking more shares," said Satomi, who categorized his relationship with Sega as friendly.

Satomi said he wanted to join Sega's board of directors as soon as possible and play a role in the video game publisher's management. Separately, sources close to the matter said Satomi would become a board member early next year.

Sammy also develops video games for commercial use, along with its core business of supplying machines for pachinko parlors, which are ubiquitous in Japan and are invariably filled with devotees watching as tiny metal balls whirl around the upright pinball machines.

Players can win or lose money but the government defines it as a form of entertainment, not gambling.

One of the potential benefits from the acquisition of Sega shares, Satomi said, will be in sales of Sammy's "Atomiswave" game machines for arcade use. Sammy plans to use Sega's library titles and branding strength to help the fledgling machines.

Sammy started selling the arcade machines in April and Satomi said the game development costs are significantly less than for existing machines. Atomiswave also allows arcade operators to change unpopular games by switching cartridges.

Shares of Sega fell 5.23 percent on Wednesday to 1,014 yen, while Sammy shares closed down 1.4 percent at 3,530 yen. By comparison, the benchmark Nikkei average fell 2.11 percent.

($1=107.11 Yen)

Hmm... no so sure if this is good or bad... I don't know if Sammy's taking over and telling Sega to do more arcade games on the Atomiswave (which I believe is more designed for 2d than 3d) will be good for Sega... looks like it could hurt Sega's uniqueness and experimental games, for sure... :(