Report: Analysts Predict More Japanese Mergers

Analysts in Japan are predicting that major Japanese publishers such as Konami and Capcom are looking for mergers, according to a report by Bloomberg, in order to help raise earnings and combat the rising cost of development. “Rising costs and falling profit margins will speed up consolidation in the industry,” Konami executive officer Michihiro Ishizuka said. “Buying companies with know-how and infrastructure for online businesses would make a lot of sense for us.” Konami has already purchased Hudson Soft, as well as stakes in toy maker Takara, developer Genki, and fitness center operator People Co. Although Ishizuka’s comments do appear to confirm Konami’s interest in a merger, the input from analysts seems rather less reliable. “Companies like Taito, Bandai, and Namco are not merging because they are facing financial ruin,” said Takashi Oya, an analyst with Deutsche Securities in Tokyo. “They are looking three years down the road and thinking this is the right strategic choice.” The report seems to echo the direction of the Japanese developers at large, since Square Enix (already the result of a merger) has recently made a bid to acquire Taito; two: Bandai and Namco announced their merger back in May, and, although not yet final, are exhibiting jointly at the Tokyo Game Show. “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 in Tokyo. “The most effective of possible combinations for Capcom would be if Sega Sammy bought the company,” he said. According to Capcom spokesman Ryosuke Tanaka, as quoted by Bloomberg, the company has not been involved in any merger or acquisition in its 20-year history, a statement that may be something of a resolve for the company to remain independent.