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Namco, Bandai To Merge

Namco, Bandai To Merge

May 2, 2005 | By Simon Carless

Japanese-headquartered toy, cartoon and game creator Bandai has announced that it will be merging with game developer and publisher Namco, in a deal worth around 175.3 billion yen ($1.7 billion) in cash and stock.

The deal is set to close at the end of September. and will create a new company, Namco Bandai Holdings Inc. There are no expected layoffs as part of this plan, and before the merger announcement, Bandai had 979 employees and Namco had 2,413 employees.

Although well-known in the West for games such as Pac-Man and the Ridge Racer, Soul Calibur and Tekken series, Namco's home video game revenues only account for about a quarter of its current total, with its Japanese arcade ownership and operation accounting for the majority.

Bandai, while known for its often animated TV series, including Dragon Ball Z and Power Rangers, has a much lower profile in the U.S. game market, since the majority of its video games are based on anime properties, but has released games based on its Digimon, .hack, Gundam, and Inuyasha series, to name but a few.

In official merger documents, the companies noted, as a reason for the merger, that "in the domestic Japanese market, the number of children has been decreasing due to declining birth rates and people's hobbies and interests have diversified."

The statement went on to comment: "In the game software business, by integrating Bandai's know-how for character merchandising and Namco's technology development capabilities, we will develop more attractive game software and... target the global market."

The companies also discussed the 'network business' of online and other subscription gaming, indicating it intends to increase subscribers in this market too, and names Namco's Kyushiro Takagi as the chairman and director of this new merged company, with Bandai's Takeo Takasu as the president and representative director.

In the West, Namco publishes its own titles in North America through its Namco Hometek offices in Silicon Valley, and is recently expanding its reach into the PC market with Flagship's Hellgate: London. Bandai has also published a number of its own titles in North America, including the .hack series, but both companies chose to co-publish in Europe, with Bandai often twinning with Atari.

However, this Japanese merger is pending approval from both Namco and Bandai shareholders, and a number of previous Japanese mergers have not gone through as expected, including a previously proposed Namco merger with Sega in 2003. Should it successfully complete, this new merger will create a company that had 458 billion yen ($4.36 billion) in combined revenue up to March of this year.

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