Those of you without children who are mad about console games may not be aware of Japanese company Square Enix, but its legendary Final Fantasy series of games both ensures its position in the vanguard of gaming legends and its financial security and independence. It is now in about its 13th iteration. Now the company is engineering a takeover of Nintendo DS gaming outfit Tecmo, author of such favorites as Ninja Gaiden Dragon Sword, paying about $205 million.
The takeover is a friendly bid in front of the management, as the company is not certain of financial survival and this is a long cry from the hostile merger activity of EA Games, in its recent assault on rival publisher Take Two Interactive in the US gaming market, an offer that has now been called off while the two are in friendlier talks about co-operation. Activision Blizzard has also just merged with the gaming arm of Vivendi Universal, creating two monsters in the US market.
The Tecmo shareholders have until the end of this week to accept the offer, and although this is a friendly process in a market very different from the US, where publishers rarely write their own games, and are really logistical operations with huge retail outlets, this still represents something of a continuing consolidation in Japanese gaming.
Square Enix already owns Taito, the company that originally brought the world the arcade game, Space Invaders and runs it at arms length, which appears to be the plan with Tecmo.
The company’s offer is 920 yen per share, which represents a 30% premium or more over it’s share price of 706 yen, which the Tecmo was at prior to the offer. It currently sits closer to 888 yen giving it a value of $198 million and the offer price will push that up to $205 million.
Square Enix has made a number of statements about buying into other gaming concerns recently, to protect it from intensifying Japanese competition, and a broadening base of gaming devices. Its CEO has even suggested that the long held Japanese gaming operations need to extend outside Japan, or risk losing their global gaming dominance.