Sega Stock Jumps on Reported Microsoft, EA Bids

Shares in Japanese video game maker Sega Corp.,soared on
Friday after a media report that Microsoft Corp and top U.S.
game publisher Electronic Arts Inc were considering billion-
dollar takeover bids for the company.The Asian Wall Street
Journal said the U.S. companies wanted to buy all or part of
Sega, which is already involved in merger discussions with fellow
Japanese game maker Sammy Corp.

The report sparked a buying spree for shares in Sega, which had a
market capitalization of 129.4 billion yen as of Friday.The Journal,
quoting people familiar with the situation, said Microsoft were separately
exploring the possibility of buying all or part of Sega, but had yet to hold
formal talks.

The news emerged two weeks after Sega, Japan’s largest game arcade
operator, said it would merge with Sammy Corp, the country’s largest
maker of pinball-style ‘pachinko’ game machines, and would abandon
plans to restructure on its own.

“Many investors and employees at Sega believe Sammy is not an appropriate
partner and that the merger would bring little benefit to Sega. Now, it is not
sure if the deal will go through,” Morgan Stanley analyst Shunji Yamashina
said.Yamashina also said, he would not be surprised by a Microsoft bid for
Sega since it wants to beef up it game line-up for its Xbox console which in
Japan, lags behind competitors like Sony Corp’s PlayStation 2 and Nintendo
Co Ltd’s GameCube. For EA, such a deal would be less attractive because it
makes games similar to Sega’s,Yamashina said.

The newspaper said Microsoft had asked at least one U.S. investment bank to
investigate ways to buy all or part of Sega.It also stated EA had approached
Japanese game makers in recent weeks about launching a joint bid for Sega.
Sega said it had not received any offers.Analysts said Microsoft would have to
convince Sega’s biggest shareholder, CSK Corp, before any deal went ahead.
CSK, an information services provider, holds a 22.3 percent stake in Sega and is
thought have played a big role in arranging the deal with financially sound Sammy.