Square Enix is offering to purchase more than half of the outstanding Tecmo shares at 920 yen per share, which is a 30% premium over the share's August 28 price of 706 yen. Square Enix called Tecmo a "a group of excellent creators" and "a precious human resource," but they also expressed concern over the future of the smaller company in today's market.
Square Enix is best known for its RPG franchises like Final Fantasy or Dragon Quest, while Tecmo has made a name for itself in genres outside of Square Enix's scope. Tecmo is best known for their fighting series Dead or Alive, their action series Ninja Gaiden, and their horror franchise Fatal Frame. If the acquisition goes through, Tecmo will be a wholly-owned subsidiary of Square Enix, much like Taito after a 2005 acquisition. Square Enix itself is a result of a 2003 merger between RPG powerhouses Square and Enix.
However, Square Enix has stated that it will not enact the proposal if it doesn't receive approval from Tecmo's board of director's first. With the September 4 deadline, the outcome will be clear at the end of this week one way or another.
SQUARE ENIX PROPOSES FRIENDLY TOB TO TECMO, LTD.
London, (29th August 2008 ) – 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.
Maybe Square Enix just see's a juicy, vulnerable target?
At least they're being friendly about it.
SEXTEC?
