Koei, Tecmo Detail Merger Plans

Japanese publisher/developers Koei (Dynasty Warriors) and Tecmo (Ninja Gaiden) are giving more details on their upcoming merger, revealing they plan to to reorganize into a new holding company in spring 2009, as the companies revealed more details of their merger. After rejecting a $260 million friendly takeover bid from Square Enix, Tecmo entered into talks with Koei in early September. Later in the month, the two companies formed a joint committee to develop an integration plan. Koei president Kenji Matsubara now says the two companies will swap their shares for stock in a new holding company. Further specifics are expected in November. "I can't give an absolute value for Tecmo shares because the swap ratio will depend on market prices, but I doubt it will fall below ¥920 ($8.66)," notes Matsubara in a new Bloomberg interview. "In the ¥3 trillion ($28 billion) global games market, we have revenue of ¥40 billion ($377m), which begs the question of whether we can survive. We plan to make the most of this merger and move on to the next step, which may include acquisitions." Koei is currently ranked as the eighth-biggest publisher in the Japanese market, with net income expected to rise by 24 percent to ¥6.5 billion ($61m) in the company’s next financial year. Tecmo’s market value is more than four times lower than Koei's -- the company doesn't make the list of the top ten Japanese publishers. The company expects its next full year profits to rise by 0.8 percent to ¥1 billion ($9m).