Sammy buys huge stake in Sega; takeover on the cards

Gambling arcade giant Sammy has announced that it is to buy a 22.4 per cent stake in Sega from the company's one-time parent company, CSK, and has hinted that it may make Sega into a subsidiary in the future.

The purchase, which is being made for some 45.33 billion Yen (â'¬346 million), makes Sammy into Sega's largest shareholder, and follows the collapse of merger talks between the two companies last May.

Then, Sega said that the two companies "lacked synergies" and considered a merger approach from Namco instead - and then apparently decided that it didn't need a merger partner after all, allegedly also rejecting business proposals from Microsoft and Electronic Arts in the process.

That very public fiasco saw then Sega president Hideki Sato and COO Tetsu Kamaya stepping down from their roles at the company, while Sammy fumed over the nature of its rejection by Sega - with one senior executive quoted as saying that Sega had "betrayed and embarrassed us".

It's now clear that while Sega may have lost interest in merging with Sammy, Sammy did not drop the idea - and its enormous investment in Sega stock today proves just how serious it is about acquiring one of the world's largest and best-known publishers.

"In the future, we may take an additional stake in Sega," Sammy president and CEO Hajime Satomi told a press briefing on the acquisition. "We won't rule out the possibility of making [Sega] a subsidiary." Satomi is expected to take a seat on the Sega board at the earliest opportunity.

So where does this leave Sega's management, who rejected Sammy's merger overtures so publicly last spring? According to Satomi, talks with the company's senior management were "positive" and he described himself as "confident that we will be able to cooperate in a friendly manner," while Sega itself released a statement announcing that the two companies had agreed to work together for the benefit of Sega's future business development.

Sammy, whose main business is the manufacture of Pachinko gambling machines for the Japanese market, has been attempting to build up its presence in the videogame market for some time, and has seen some success with franchises such as the Guilty Gear series of beat 'em ups. It's expected that even if Sammy completes a take over of Sega by acquiring further stock in the company, which seems eminently likely, the Sega brand will be retained as the company's videogame and arcade machine brandname.