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January 24, 1997updated 05 Sep 2016 1:01pm

BANDAI! SEGA PUTS TROUBLES BEHIND IT WITH MERGER

By CBR Staff Writer

In the Perils of Pauline world of video games, it is only to be expected that the major players will stage regular with one bound he was free coups to get out of their troubles in a seemingly, and Sega Enterprises Ltd staged just such a stunning move yesterday when it announced that it would acquire leading Japanese toymaker and first licensee of Apple Computer Inc’s Pippin Macintosh-derived games console design, Bandai Co Ltd. The combination, to take effect on October 1, is billed as a merger, but they also say that Bandai will be dissolved into the new company to be formed on October 1. Bandai is best known for its Power Ranger series of toys, but it has just created almost unprecedented turmoil in the Japanese market with its tamagocchi Virtual Pet, a $16 egg-six and egg-shaped device with a screen on it that shows a bird that can be fed and stroked, leaves its droppings all over the place, and will die if neglected. Demand for the thing is such that they are changing hands at $420 each. It’s not just high-school girls who are buying them, but primary school kids, office secretaries and middle-aged men, the company chortles, relating how it was taken by surprise by the success of the toy, which starts life as an endearing, bird-like image on the screen of an egg-shaped keyring device. It changes from a chick to a fully grown adult in around 10 days. But, reports Reuter, the owner must feed, groom and soothe the digital creature or else see it waste away and die from neglect. Bandai looks for it to generate sales of $85m next fiscal and plans to launch a new version and related goods in next month; it has shipped 550,000 so far and sees 3 million by April, 6 million by June. The problem the acquisition alleviates for Sega is that its Saturn games machine is increasingly being seen as a poor third in a three-horse race, particularly in the US, and earlier this month, it had to cut its profit forecast for the fiscal year to March 31. Bandai has also been hurt by a slowing market and profits for the six months to September 30 were down more than 50% as it confessed that it had mis-read market trends showing increased demand for low-priced toys. Hayao Nakayama, president of Sega said he hopes the new company will achieve group profit of $425m for the 199798 fiscal year. Annual sales will exceed $5bn. Sega will pay 0.76 of a share for each Bandai share.

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