PDA

View Full Version : Sega Disses Sammy's Merger Plans



Brevity
05-08-2003, 09:02 AM
gamespy
Aramo | 5:03 | Industry Buzz

Sega and pinball machine producer Sammy have scrapped their merger plan, announced in February, after failing to agree "on what management style the merged firm should take and other merger conditions," according to Sega President Hideki Sato.

Sega's other option to better its financial situation, namely merging with Namco, has unexpectedly vanish into thin air as well; Namco withdrew its merger offer this morning.

"Sega told us on Thursday that it was not in a situation to give a specific answer to the proposal. And we decided that it is not the right time to proceed with the merger discussions," Namco explained in a statement, leaving a desperate Sega on its own. Sato did confirm other companies had contacted Sega with respect to a merger deal, but declined to comment whether Electronic Arts had done so when asked about this.

Analysts hold Sega's management responsible and objurgate their waffling. "The credibility of Sega's current management has taken a deadly blow," said Takeshi Tajima, analyst at BNP Paribas. "Institutional investors and most long-term retail investors have long avoided Sega's shares, but the recent wavering by the company's management has done extra damage."

An upward revision in Sega's annual earnings estimates accompanied the announcement on the spoiled merger plans. The company expects a net profit of three billion yen ($25.8 million) for the year ended March 31, up 500 percent from its initial estimate of 500 million.

Analysts said Sega's management needed to focus on its turnaround plan for its consumer game software operations and that it would not be wise to keep wavering. "The worst thing for Sega is to stay uncertain. Sega is not facing any imminent financial risk now and management should just decide what they should do to maintain employees' trust," said Shunji Yamashina, analyst at Morgan Stanley. (Reuters)