Japanese game software makers Square Co Ltd
and Enix Corp said on Tuesday they planned to merge in April to
pool resources and technology to allow them to better compete
in the rapidly changing video game industry.
The deal would be worth about 88.79 billion
yen ($727 million) at current share prices.
Under the deal, one Square share will be exchanged
for 0.81 share in Enix. Enix will issue 48.76 million new shares
to swap existing outstanding shares in Square.
Square shares were up 8.28 percent at 2,040
at 0434 GMT. Enix shares were untraded at 1,821 yen with bids
Japanese video game software makers are facing
rising development costs to create new games for advanced gaming
systems in a heavily saturated domestic market.
Enix, known for its blockbuster "Dragon
Quest" games, and Square, creator of hit "Final Fantasy"
role-playing games, enjoy solid sales from these million-seller
titles but they also make profits vulnerable to sudden shifts
"In order to defy stiff competition in
the game market and to survive for a long term, we thought it
would be the best to join our forces," Enix director Tatsuo
Tomiyama told Reuters.
Square, which lost 16.6 billion yen after an
unsuccessful foray into movie-making last year, is now owned 18.6
percent by Sony Corp, which makes the powerful PlayStation 2 game
Square spokesman Hideki Tsuchiya said the game
creator expected to win approval for the merger from shareholders
including Sony as the two companies have little duplication in
their operations and the merger was expected to create synergy.
Enix and Square, along with another gamemaker,
Namco, agreed last year to collaborate on operations.
The company officials said the latest deal would
not include Namco.
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