Sony Group has sent an initial letter of intent to acquire KADOKAWA Corporation's shares

[fiendcode]

At the right price I wouldn't mind to sell to Sony, Nintendo, or even MS. They are good companies.

You're about as likely to see the Tsujimotos sell out as you are the Empress and Kou Shibisawa. These are the old major pubs (along with Konami) that have the highest degree of family ownership and control still and there's really not much inventive to cash out for any of them.

For Capcom specifically I also don't see Sony offering the $12B+ it'd probably warrant.

• Kadokawa legal trouble and hack, tanking their share price

The impact appears to have been temporary as things are holding at nearly $4B market cap.

 

[The Hunter]

The impact appears to have been temporary as things are holding at nearly $4B market cap.

Before the news of the possible Sony acquisition their market cap was at 2.8 billion.
It has risen and stabilized at 4 billion due to ongoing negotiations with Sony.
If the acquisition does not come to fruition they will almost certainly drop again

 

[Godzilla]

ソニーが｢KADOKAWA買収｣で直面する3つの難題 クセの強い2社がタッグを組むのは簡単でない | IT･電機･半導体･部品 | 東洋経済オンライン

According to that site (and thanks to this Spanish one for the translation ) Sony might be having second thoughts about the purchase since the price has gone up about a full billion since the leak.

I have no idea about Toyo Keizai, so who knows.

 

[Oregano]

ソニーが｢KADOKAWA買収｣で直面する3つの難題 クセの強い2社がタッグを組むのは簡単でない | IT･電機･半導体･部品 | 東洋経済オンライン

According to that site (and thanks to this Spanish one for the translation ) Sony might be having second thoughts about the purchase since the price has gone up about a full billion since the leak.

I have no idea about Toyo Keizai, so who knows.

Toyo Keizai is the oldest business publication in Japan, but it's hard for anyone to say what the feeling is internally.

 

[chroeser]

And even then the higher valuation is because of the potential acquisition. The share price will plummet if the deal is cancelled.
But I don't believe the price will be the most important part for Sony. Kadokawa is uniquely additive to their business, they will pay what is necessary.
The greatest challenge are the hidden risks like the corruption allegations or the present leadership of Kadokawa. No one wants to buy a company and then inherit considerable legal risks.

 

[Paronth]

ソニーが｢KADOKAWA買収｣で直面する3つの難題 クセの強い2社がタッグを組むのは簡単でない | IT･電機･半導体･部品 | 東洋経済オンライン

According to that site (and thanks to this Spanish one for the translation ) Sony might be having second thoughts about the purchase since the price has gone up about a full billion since the leak.

I have no idea about Toyo Keizai, so who knows.

I just read this article in Japanese and everything they say seems to be their opinions, nothing concrete, talks about how the price could be an obstacle like it was with Paramount and with the increase in the value of Kadokawa after the leak it could be one too...

I think the shareholders know very well that the increase is due to the leak and if the purchase does not happen, the stock will be back to what it was before the leak.

 

[Ronin]

ソニーが｢KADOKAWA買収｣で直面する3つの難題 クセの強い2社がタッグを組むのは簡単でない | IT･電機･半導体･部品 | 東洋経済オンライン

According to that site (and thanks to this Spanish one for the translation ) Sony might be having second thoughts about the purchase since the price has gone up about a full billion since the leak.

I have no idea about Toyo Keizai, so who knows.

This is a bunch of a nothing .

From the very beginning, Sony was already prepared to pay a premium.

 

[Godzilla]

Let me correct my statement:

Based on the information we have, this seems like a done deal—just waiting to smooth out some edges.

As for Capcom, expanding the Japanese workforce seems like a logical next step.

You went from 100% to 50/50, so you clearly aren't sure about this too.

Your corrected statement is actually a backtrack from your original statement.

 

[derby_440]

This is a bunch of a nothing .

From the very beginning, Sony was already prepared to pay a premium.

Anything can happen, Sony can always backtrack since nothing is official.

 

[The Hunter]

Unless a statement comes out next week confirming that Kadokawa has accepted or rejected the terms written in the LOI, or unless there is some leak from Reuters or Bloomberg, we will have no news about this acquisition for a long time. Which could be either negative in the sense that the two sides are still facing difficult divirgences which could lead to the failure of the deal, or it could be positive because they may have already signed the LOI and cannot say anything until the due diligence phase is over.

 

[fiendcode]

This is a bunch of a nothing .

From the very beginning, Sony was already prepared to pay a premium.

The issue might be if with the added premium the offer was below/at where current value sits and Sony has to meet the new target with another premium. Premiums are usually only 25% or so, so say Sony offered $3.5b and are now faced with bumping that to $4.5b or something?

I also don't rule out the possibility of influence or even competitive offers from other major stakeholders like Tencent or Bandai Namco (both of whom are larger shareholders in Kadokawa than Sony). There's potentially not only the market to navigate but also other parties could affect the offering price.

Before the news of the possible Sony acquisition their market cap was at 2.8 billion.
It has risen and stabilized at 4 billion due to ongoing negotiations with Sony.
If the acquisition does not come to fruition they will almost certainly drop again

Oh definitely, the stock is being boosted by acquisition news. Same exact thing happened with Activision Blizzard, although unlike that scenario I can see other possible suitors for Kadokawa if Sony falls through.

 

[Broseph]

I honestly don’t see many other suitors of Kadokawa if their main hangup is wanting someone to buy the whole business and not just parts of it. That cuts down potential suitors significantly

 

[fiendcode]

I honestly don’t see many other suitors of Kadokawa if their main hangup is wanting someone to buy the whole business and not just parts of it. That cuts down potential suitors significantly

It's really just Tencent and Bamco probably and again the actual publishing biz is probably the toughest fit (like with Sony). Longshots would be Toho, Microsoft or Nintendo (who's also a shareholder from their old Dwango investment), but they don't seem realistic imo.

 

[enpleinjour]

It's really just Tencent and Bamco probably and again the actual publishing biz is probably the toughest fit (like with Sony). Longshots would be Toho, Microsoft or Nintendo (who's also a shareholder from their old Dwango investment), but they don't seem realistic imo.

Bandai Namco have no chance.

Never mind the fact they let their biggest publishing deal by far slip through, do not even have the leverage to stop FROM from parting ways, and allowing Sony and Tencent to invest directly into FROM, their profits and cash are around an order of magnitude below Sony and near another order of magnitude below Tencent.

They ain't even making the starting line.

Yes I can see what you are referencing now. Sorry about that, just that specific %s you said made no sense for anime content, and looking at the chart they aren’t. The general book category includes everything, like financial magazines or school prep books.

I see, well removing general books, the marketshare for manga+LN is around:

• Kadokawa - 15%
• Shueisha group - 34%
• Kodansha - 20%

Square Enix seems 4th with 5%, the Top 4 publishers have 80% of the market.

 

[fiendcode]

Bandai Namco have no chance.

Never mind the fact they let their biggest publishing deal by far slip through, do not even have the leverage to stop FROM from parting ways, and allowing Sony and Tencent to invest directly into FROM, their profits and cash are around an order of magnitude below Sony and near another order of magnitude below Tencent.

They ain't even making the starting line.

Bamco's big enough to swing the $5b Kadokawa would warrant and they have as much if not more potential synergy as Sony or Tencent with IP, animation, games, etc. Sometimes too smaller firms can offer more for M&A in terms of integration, board seats, etc. Rather than just becoming a subsidiary or having their parts cannibalized and spread around as they would under Sony or Tencent, Bandai Namco Kadokawa could be the actual group holding company with a place for the executive to stay on and still steer things. That's why Bandai Namco went this direction originally rather than letting Nintendo swallow them.

Bandai also have an amicable ongoing relationship with From still, hell the ER copyright transfers wouldn't have happened otherwise. I feel like the split here tends to get overblown, global publishing was the obvious path forward for From and it's bizarre to me how anyone could see this as a clear disqualifier for Bamco while also believing there'd be zero issue giving it up under SIE.

 

[Remember_spinal]

Bandai Namco would likely be another merger not buy out

 

[enpleinjour]

Bamco's big enough to swing the $5b Kadokawa would warrant and they have as much if not more potential synergy as Sony or Tencent with IP, animation, games, etc. Sometimes too smaller firms can offer more for M&A in terms of integration, board seats, etc. Rather than just becoming a subsidiary or having their parts cannibalized and spread around as they would under Sony or Tencent, Bandai Namco Kadokawa could be the actual group holding company with a place for the executive to stay on and still steer things. That's why Bandai Namco went this direction originally rather than letting Nintendo swallow them.

Bandai also have an amicable ongoing relationship with From still, hell the ER copyright transfers wouldn't have happened otherwise. I feel like the split here tends to get overblown, global publishing was the obvious path forward for From and it's bizarre to me how anyone could see this as a clear disqualifier for Bamco while also believing there'd be zero issue giving it up under SIE.

No its not. BN has $2B cash and makes ~$1B profit, its nowhere close to Sony, let alone Tencent. It won't even make it to the bidding line.

In terms of synergy, thats also wrong.
Sony has one of the biggest anime production companies, anime studios, a music label, a global anime streaming service, one of the biggest anime merch stores, a global gaming platform and a global gaming publisher.

FROM wouldn't be having other game publishers invest in itself if BN was such an amicable ongoing relationship. Its pretty obvious what happened: Elden Ring has likely grossed $1B+ yet all FROM got was $100M profit or so.

Other 3rd party pubs may be willing to give FROM more, but where the real money is made is if a global publisher owns FROM and double that if a platform with global publishing owns FROM. You can see where thats going.

 

[fiendcode]

No its not. BN has $2B cash and makes ~$1B profit, its nowhere close to Sony, let alone Tencent. It won't even make it to the bidding line.

In terms of synergy, thats also wrong.
Sony has one of the biggest anime production companies, anime studios, a music label, a global anime streaming service, one of the biggest anime merch stores, a global gaming platform and a global gaming publisher.

FROM wouldn't be having other game publishers invest in itself if BN was such an amicable ongoing relationship. Its pretty obvious what happened: Elden Ring has likely grossed $1B+ yet all FROM got was $100M profit or so.

Other 3rd party pubs may be willing to give FROM more, but where the real money is made is if a global publisher owns FROM and double that if a platform with global publishing owns FROM. You can see where thats going.

Bamco's worth 3-4x Kadokawa, they'd have no issues raising the necessary capital for M&A. They might not win a bidding war but again, as a smaller company they can offer other perks in terms of integration. And really if it comes to down to just cash, Sony's out too if Tencent wants it.

Bamco also has multiple groups for animation production, game production, IP production, toy production, music production and they already coordinate more closely with Kadokawa in many of these areas. They're also a larger stakeholder in Kadokawa than Sony, the strategic link between these companies isn't new (Kadokawa likewise holds a much larger stake in Bamco than they do Sony).

If the continuing relationship with From wasn't amicable then why did Bandai transfer ER copyrights, why did they publish ACVI, why did they follow through with Erdtree? If From's "slipped through" and they've got such an adversarial relationship... why are they still working together and have been for the two years since Sony/Tencent invested?

 

[Magic]

It’s time to let this Bandai Namco idea go. It isn’t really worth discussing.

 

[Broseph]

Yea the Bamco situation is a pipe dream. IMO FS being so aggressive in trying to cut out publishers tells me enough about that relationship. Bamco prob taking a massive cut

 

[chroeser]

If Kadokawa wishes to be mostly complete even after an acquisition than Tencent is the least likely. The Japanese government would never allow Kadokawas publishing parts be part of a Chinese company that bends the knee to the CCP.
The government would demand big parts of the company to split, not the games or anime industry endeavors but the more critical ones.

 

[Refyref]

Yea the Bamco situation is a pipe dream. IMO FS being so aggressive in trying to cut out publishers tells me enough about that relationship. Bamco prob taking a massive cut

From Software's ambitions would have next to no impact on what Kadokawa's board will decide in regards to selling. (Not to mention that they're still working with them all the time.)

 

[enpleinjour]

Yea the Bamco situation is a pipe dream. IMO FS being so aggressive in trying to cut out publishers tells me enough about that relationship. Bamco prob taking a massive cut

Yeah the NB argument is not even worth considering.
We can have an idea of the NB tax. NB's profit rose by $200M+ FY ER released, meanwhile FROM only had a revenue of $140M. BN making more profit than FROM making revenue from ER.

 

[derby_440]

Only chance Sony have is to acquire all of Kadokawa. Otherwise someone like Fromsoftware is likely worth $2b on its own alone and many buyers like Tencent and maybe even Microsoft.

 

[Oregano]

Only chance Sony have is to acquire all of Kadokawa. Otherwise someone like Fromsoftware is likely worth $2b on its own alone and many buyers like Tencent and maybe even Microsoft.

Going by the Bloomberg report Kadokawa isn't interested in selling off parts piecemeal. It makes sense to me, why allow Sony(or any other company) to pick clean the most valuable bits of the company.

It's going to be a big question if the acquisition goes through as well, whether Sony tries to spin off or sell off the parts they never wanted(or worst case shut them down). Probably a good reason they won't rush to integrate everything.

 

[fiendcode]

Yea the Bamco situation is a pipe dream. IMO FS being so aggressive in trying to cut out publishers tells me enough about that relationship. Bamco prob taking a massive cut

I think it's a longshot personally (as is Tencent at this stage), I'm just saying they have the means, synergies and connections to do it.

Likewise why would Bamco take a massive cut to... hand over their ER copyrights to From? Again, I think people are greatly overstating the apparent discord between these partners. Nevermind they're still working together uninterrupted, meanwhile in the two years since they invested hundreds of millions, Tencent and Sony have gotten exactly what out of From?

From Software's ambitions would have next to no impact on what Kadokawa's board will decide in regards to selling. (Not to mention that they're still working with them all the time.)

I'd actually counter that From has pretty incredible leverage when it comes to things given investors are telling the press their staff is worth a third to half the whole company. If they walk would the deal even happen?

But that swings both ways, I think this acquisition will happen but I also believe From will have more direction than any Sony Group division regarding their own fate. They'll probably go under SIE if that's what they want and on the terms they want.

 

[The Hunter]

I think it is useless to talk about an acquisition by Bandai or Tencent.
Bandai doesn't have the resources to make such an acquisition, or if they do it would be a big risk for them and in any case they would be beaten easily by Sony which has many more resources.

Tencent on the other hand has the resources but integrating Kadokawa could be complex for them, not to mention that Kadokawa might not be happy to sell to a foreign company and there is the Japanese antitrust to overcome, and I don't know if it would be in favor of a Chinese company taking over one of their major companies.

Right now the only credible buyer is Sony, in fact they are discussing. If the deal with Sony blows up, I can see Kadakowa in the hands of some private fund or remain independent with all the repercussions ( if it is not acquired it is very likely they will suffer a sharp drop in the stock market).

And about the possible deal with Sony,
unless there is some official statement this week or there is some leak from Reuters or Bloomberg, we won't know anything until mid- to late December/early January.