Richard Li Tzar-kai's Pacific Century CyberWorks will today announce the acquisition of a Japanese video game software producer in a 27 billion yen (about HK$1.95 billion) deal which will create its own listed vehicle on the Tokyo market.
In a rare foreign takeover of a Japanese-listed company, CyberWorks will buy control of Jaleco, a thinly traded company listed on the Japanese over-the-counter market, according to sources close to CyberWorks. The takeover will create Pacific Century CyberWorks Japan. It will hold the Hong Kong group's interests there and build the Japanese version of its dual interactive Web site and television service, Network of the World (NOW).
CyberWorks is to invest 25 billion yen in the deal, while three Japanese groups - advertising company Dentsu, entertainment ticketing company PIA, and financial services company Orix, will inject a further 2 billion yen. The takeover will be achieved via a number of steps to satisfy Japanese regulators and leave CyberWorks Japan cashed up and more than 80 per cent-owned by CyberWorks and its partners.
Loss-making Jaleco, which generated total sales of 6 billion yen in the year to March 31, makes video-game software for Sony PlayStation, Game Boy and Sega Dreamcast, as well as producing arcade game machines. It has a market capitalisation of US$75.8 million based on yesterday's close of 632 yen - a rise of 12 yen on the day. However the takeover bid - at 328 yen a share - will value the company at just over half that.
It is based on a six-month average price rather than the last close.
With some 95 per cent of Jaleco's revenues earned from games' software, CyberWorks is expected to derive much of its games-related content for NOW from its new acquisition.
Content will also be provided by its three blue-chip partners. As well as being the holding company for NOW Japan, the Japanese listed group will also invest in infrastructure-related interests such as data centres.