Tomy/Takara Shares Rise, Layoffs Announced

Japanese toy and occasional game manufacturers Tomy and Takara announced plans to merge in March 2006, to become Japan's fourth-largest toy company. News of the merger combined with the merged company's expected sales goals sent both companies' share prices upward. Tomy gained around 5.3 percent, rising to 1,925 yen ($17.49 USD) per share, while Takara saw an increase of 7.9 percent to 368 yen ($3.34 USD). The joint company, unnamed as yet, announced long-term goals of reaching 200 billion yen ($1.81 billion USD) in sales and an operating profit of 16 billion yen ($145 million USD) by the end of fiscal year 2008. Takara’s forays into video game publishing have been relatively minor, with Choro-Q (aka Penny Racers) and Battle Arena Toshinden being the most notable, and the company spun off its game properties into Atlus in January 2004. However, Tomy has had greater, albeit still limited success in the video games market, particularly with its license of the Naruto anime series (also the subject of video games by Bandai), and a number of Zoids titles for various platforms. One means of accomplishing that will be to reduce the joint workforce of both companies, according to separate reports from consumer site GameSpot. Within the first three years of the merger, the company will cut costs by 19 billion yen ($173 million USD) by laying off 15 percent of the current staff. An expected 640 employees will be affected by the layoffs, largely on the Takara half of the merger. The merged company will also reduce its line from 7,800 products to 5,400. The game production division, post-merger, will receive renewed focus to meet the expanding market; Tomy and Takara have already begun work with mobile phone entertainment developer Index Corporation to launch a subsidiary named T2i Entertainment, which will produce games and other entertainment for the mobile market.