TOKYO--Sammy Corporation, the leading Japanese Pachinko machine manufacturer, acquired a 22.4 percent stake of Sega today. Sammy paid CSK, Sega's biggest stockholder, a total of ¥45.3 billion ($419 million) for 39.15 million shares of the game publisher. Sammy had previously owned just 100,000 shares of Sega. After the transaction is completed on December 11, Sammy will become the top shareholder of Sega with a 22.4 percent stake. Sammy and Sega were in merger talks earlier in the year, but the negotiations collapsed after the two companies failed to agree on a stock ratio and other details. A rival bid by Namco had also effected Sega's decision at the time.

　　Sammy president Hajime Satomi explained the company’s move towards acquiring Sega’s stock rather than to negotiate another merger. “A merger will take too much time. Last time was a failure, and we didn’t want to bring back the same mistake,” said Satomi, who is now lobbying for a position on Sega’s board. For its part, Sega released a statement saying, "We have continuously worked together up until now. And we understand that we will continue to work together to ensure Sega's growth."

　　John Rowe, president and chief operating officer of Sammy Studios, Inc. spoke with GameSpot this morning and said his organization here would stay focused on the existing Sammy games in development--for the time being. "Now that this has happened, we sit down with the Sega folks and figure out the best strategy." He said there are no immediate plans to make changes to stateside staff or management.

　　Referring to larger issues of Sammy leveraging Sega-owned intellectual property (its brands), and how the two organizations might interact, Rowe said, "If there are ways we can leverage that IP we will, [but] it has to be done right, with attention to quality."

　　Overall, Rowe said his company would remain focused on product, and that the two companies would take the next 60 to 90 days to figure out if a change to strategy was in order. As to specifics, Rowe would only say, "In the future, certainly there will be changes--and it will affect Sega of America."

　　Satomi commented that Sammy is considering the acquisition of additional Sega shares, although there are no definite plans at the current time. The company is also considering making Sega a full-blown subsidiary in the future, which would require the hold of 50 percent of Sega’s shares. While CSK no longer holds any Sega Corp. stock, Sega itself still owns 11 percent of all company stock, Goldman Sachs owns approximately 3.5 percent of all outstanding stock, and other mutual funds own an additional 1-2 percent.

　　The specific details on how Sega and Sammy will work together will be decided following discussions between the two companies, but Sammy is already considering several plans. The two companies recently worked together on the CR Sonic, a Pachinko machine that featured Sega's mascot character, Sonic the Hedgehog. Sammy hopes to use Sega's other intellectual properties to brand their machines in a similar fashion, and to have Sega assist in the development of new Pachinko games. More importantly, Sammy and its subsidiaries are starting out a business project named NEWS (New Entertainment World of Sammy) to expand into the entertainment content and amusement sectors. Sammy hopes to use Sega to contribute to faster development of the NEWS project, leading to early profits.

　　The Pachinko business is one of the few legal methods of gambling in Japan and one of its most profitable businesses, with an annual revenue of nearly ¥30 trillion ($279 billion). Sammy currently holds 31 percent of the slot- and pinball-type Pachinko machine market, and is the top manufacturer of newer models. However, it holds only 3 percent of the traditional Pachinko machine market, although the company hopes increase its share to 10 percent over the next year.

　　While CSK will lose its hold over Sega, the company will reap a profit of ¥17 billion ($158 million) from the sale of their shares. Stock values of all the companies did not change considerably today, as the announcement came after the closing of the Tokyo markets. Sega's shares closed with a 0.5 percent rise to ¥1,025 ($9.54) for the day, Sammy fell 1.63 percent to ¥3,610 ($33.61), and CSK dropped 5 percent to ¥3,790 ($35.29).