Call us crazy, call it coincidence, but it’s not looking good for game companies whose names begin with the letter T. THQ’s flagging fortunes have continued despite the company’s new directions; they lost $27 million just last quarter. As I’m sure you’re well aware, Take-Two will likely be purchased by EA. Traveller’s Tales, Treyarch and Taito have long since been bought up; Troika went under last year. And though fan-favorites Treasure, Telltale and Two Tribes seem to have found profitable niches, their games are almost always released in the shadow of their publisher.
Tecmo, our go-to developer for bloody, sexy ninja action since 1999’s Dead or Alive 2, may well be the latest to succumb to the curse of the letter T. After losing both creative and corporate heads over a labor dispute, Tecmo’s shares plummeted… and now, Square Enix has suddenly announced its intent to purchase a majority stake in the company.
As reported by Kotaku and detailed in an official Square Enix translation below, the famed JRPG publisher has offered a friendly takeover bid at 920 yen per share — a 30% premium when compared to the company’s closing price of 706 yen on August 28th. In a briefing early this morning, Square Enix president Yoichi Wada explained that the two companies had conducted discussions since May, but indicated that the recent shakeups at Tecmo affected the timing of this announcement; that Square Enix is interested in both Tecmo’s IP and the creative teams that developed them; and that if Tecmo were acquired, the Tecmo brand itself might be lost.
Also, and particularly exciting for fans of Dead Fantasy in a world post-Soul Calibur jedi, Wada floated the idea that teams at Square Enix and Tecmo might “inspire” one another.
Though Tecmo shares have unsurprisingly traded higher (806 yen, a 14% increase) since the Square Enix announcement, it’s worth noting that the company’s stock had already hit bottom (538 yen) on August 26th, two days prior. Tecmo traded at above the 1,000 yen mark throughout May, when the companies reportedly began deliberations.
Tecmo’s board of directors have until September 4th to approve the proposal. If, however, they do not consent to the transaction, Square Enix has made it very clear they do not intend to go hostile and take their bid directly to Tecmo shareholders.
In related news, Microsoft announced yesterday that Tecmo’s Ninja Gaiden II has sold over one million copies.
Official translation of the takeover bid follows:
SQUARE ENIX CO., LTD. (the “Company”) announced today that the Company submitted to the board of directors of TECMO, LTD. (Securities Code: 9650, 1st Section of the TSE, “TECMO”) a proposal for basic conditions of acquisition of shares of common stock issued by TECMO (the “TECMO Shares”) through a friendly take over bit (the “TOB”) (the “Proposal”) in order to obtain consent to the TOB by the board of directors of TECMO.
The Proposal was made in order to acquire the TECMO Shares through the TOB, and is subject to obtaining consent by the board of directors of TECMO no later than September 4, 2008. Therefore, please be advised that the Company will NOT acquire the TECMO Shares through the TOB as planned in the Proposal in case that the Company receives no response from TECMO or fails to obtain consent by the board of directors of TECMO to the TOB, by the date. This Notice shall not be construed as solicitation for sales and/or purchase of the TECMO Shares.
1. The reason to submit the Proposal
Video games have been globally recognized as a major entertainment genre, and have now become an industry receiving considerable attention in terms of its market size and growth potential. In the meantime, the game industry in Japan is standing at a critical juncture whether it continues to be a center of the video game industry in the world, or not.
TECMO is a group of excellent creators with proven track-record in the global market, which is a precious human resource of Japan. We, however, cannot be optimistic about the future of this significant resource, given the current circumstances surrounding TECMO.
We believe that TECMO will be able to make a great leap forward by joining the Square Enix Group, which will provide the group with further growth opportunities as well.
We are planning to position TECMO as a wholly-owned subsidiary of Square Enix Holdings maintaining TECMO’s current organization and brand as in the cases of Square Enix and Taito.
2. Major Points of the Proposal
(1) TOB Price: 920 yen per share
Adding a premium of 30%+ to TECMO’s closing stock price as of August 28, 2008 (706 yen).
(2) Number of the TECMO Shares to acquire
Lower Limit: More than half of the outstanding TECMO Shares upon fully-diluted basis (including residual shares subject to stock options).
Upper Limit: None.
(3) Deadline to reply the Proposal: September 4 (Thursday)
If the Company should, by the deadline, receive no response from TECMO, or fail to obtain consent by the board of directors of TECMO to the TOB, the Company will withdraw the Proposal, and will NOT acquire the TECMO Shares through the TOB as planned in the Proposal.
Image credit: Monty Oum
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