Konami/Capcom Merger in the Works?
by Christian Svensson
Friday, 16 September 2005
Statements from Konami Executive Officer in Charge of Software Business, Michihiro Ishizuka and some conclusions analysts are drawing from them are leading them to a possible pairing with Capcom.
With mergers between Bandai/Namco, Square-Enix/Taito and Sega/Sammy all happening in the past year, consolidation has been the name of the game in Japan as it is in the U.S. and Europe. Konami was once a little higher up the food chain before these mergers took place. It is currently the fourth largest game software maker in Japan.
According to Bloomberg, Ishizuka recently said "Rising costs and falling profit margins will speed up consolidation in the industry. Buying companies with know-how and infrastructure for online businesses would make a lot of sense for us."
The software business is approximately 50% of Konami's operating profit. In April, it bought Hudson, who's strength in recent years has moved to mobile distribution of games and ring tones, though it still creates videogame content as well. Konami has also bought equity in toymaker, Takara and game developer, Genki. Somewhat oddly, it's also taken a stake in People Co., a company that runs fitness centers around Japan.
Capcom is currently Japan's 6th largest game software maker, though it's expected to post a loss in the upcoming quarter. According to the Bloomberg report, Capcom is the ideal target because any other larger player in the space would be worth more than Konami could swallow.
"Capcom is probably the most likely candidate for acquisition or merger out of the remaining large companies. The company is in a difficult situation financially," said Takada, an analyst at Cosmo Securities Co. in Tokyo. "The most effective of possible combinations for Capcom would be if Sega Sammy bought the company.
Source: Bloomberg
hmmmm wonder if this will actually happen?