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AFX News Limited
Bandai, Namco to merge in Sept to form Japan's No 3 toy, game group - UPDATE 2
05.02.2005, 06:05 AM

(Adds more merger details, market reaction)



TOKYO (AFX) - Bandai Co, Japan's largest toymaker, and Namco Ltd, a leading home video game and arcade game equipment maker, announced plans to merge in late September, creating the country's third-largest toy and game company.

Bandai and Namco said they plan to unite on September 29 under a joint holding company, in a bid to prosper in the difficult Japanese toy market, where sales and earnings are under pressure from the declining number of children in a nation that for decades has had one of the world's lowest birth rates.

The new company, Namco Bandai Holdings Inc, will be the third-largest toy and game group in Japan after Nintendo Co, the world's largest maker of portal game players, and Sega Sammy Holdings Inc, itself created through the merger last year of video game developer Sega, and Sammy Corp, a leading maker of amusement arcade machines.

'The newly integrated company will aim to create strength to survive in the entertainment industry, from synergy between Bandai's character merchandizing and Namco's game contents business as well as its amusement parks business,' the companies said in a joint statement.

In addition to being Japan's largest toymaker, Bandai owns rights to develop products based on a slew of popular Japanese animation characters, including Sailor Moon and Gundam.

Namco is the creator of the classic arcade game Pacman.

For the year to March 2006, Namco Bandai Holdings expects consolidated current profit -- or profit before tax and extraordinary items -- of 44 bln yen and operating profit of 44 bln yen, on revenue of 460 bln yen, the statement said.

Within three years, the new company aims lift annual sales to 550 bln, and its current profit to 55 bln yen, Takeo Takasu, president of Bandai and future president of the holding company, told a news conference.

The holding company will be created through a share exchange. One holding company share will be issued for each Namco share, and 1.5 holding company shares for each Bandai share.

Namco's shares soared on the announcement, while Bandai's fell.

On the Tokyo Stock Exchange, Namco rose 8.9 pct or 125 yen to close at a 52-week high of 1,531. But Bandai's shares fell 2.5 pct or 60 yen to 2,335.

After trading hours, Namco also raised its net profit forecast for the past year to March to 9.4 bln yen from 8.5 bln yen, due to the booking of extraordinary profits from sales of shares and fixed assets.

Bandai and Namco's plan to unite under a holding company is subject to the approval of the companies' annual general shareholders' meetings in June.

If approved, Bandai and Namco will be delisted from the Tokyo Stock Exchange, possibly on September 22, and the new holding company will be listed on September 29, the day of its establishment, the companies said.

kyoko.hasegawa@xfn.com

robin.elsham@xfn.com

kh/rte/jm













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