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Forums - Gaming Discussion - Square Enix definitely is setting itself up for a buyout - Part 2

Kakadu18 said:
twintail said:

If a Japanese firm is in full agreement to be acquired by a non-Japanese company (especially a gaming one), they very well can be.

Just ask Digital Kids, Grasshopper, SNK, and Tango - all Japanese studios that were bought out from non-Japanese companies.

 

These are small companies. Square Enix is way bigger than all of these. With bigger companies like SE the government would prevent a total buyout by foreign companies. Sony is a Japanese company though, but I personally still seriously doubt they are going to buy SE.

I'm not sure why the government would care about Square Enix.

Toyota? Sure maybe. But SE?



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twintail said:
Kakadu18 said:

These are small companies. Square Enix is way bigger than all of these. With bigger companies like SE the government would prevent a total buyout by foreign companies. Sony is a Japanese company though, but I personally still seriously doubt they are going to buy SE.

I'm not sure why the government would care about Square Enix.

Toyota? Sure maybe. But SE?

SE has one of the most valuable IPs popular in Japan. They even used Dragon Quest music in their Tokyo Olympic opening ceremony. I would be surprised if they didn't care about Square Enix. 



the-pi-guy said:
zero129 said:

Well lots of their games are also Epic exclusive, maybe Epic are trying to buy them .

I don't think anyone is arguing that they will be acquired by Sony because they make exclusive games for Sony.

I never said they where . But everyone is pointing to Sony buying them and they base that on?.



zero129 said:
the-pi-guy said:

I don't think anyone is arguing that they will be acquired by Sony because they make exclusive games for Sony.

I never said they where . But everyone is pointing to Sony buying them and they base that on?.

1. Both are JP

2. Has a good relationship for a long time

3. Many "big" franchise exclusives

4. Some "rumors" hinting they are both interested such as SE selling off western studios "to kill of dead weight", "credible people" claiming Sony was interested in SE, SE looking to sell shares of their studios? Jim Ryan (CEO of SIE) claiming they are still going to acquire more.

I'm guessing people are pointing at somewhere along these and I don't think they are unreasonable. 



Shatts said:
zero129 said:

I never said they where . But everyone is pointing to Sony buying them and they base that on?.

1. Both are JP

2. Has a good relationship for a long time

3. Many "big" franchise exclusives

4. Some "rumors" hinting they are both interested such as SE selling off western studios "to kill of dead weight", "credible people" claiming Sony was interested in SE, SE looking to sell shares of their studios? Jim Ryan (CEO of SIE) claiming they are still going to acquire more.

I'm guessing people are pointing at somewhere along these and I don't think they are unreasonable. 

At the one time your both agreeing with me and going against what PI is trying to say.

If we go by exclusives maybe Epic are also looking to buy them? ..



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First, the Ministry of Finance published a list of all listed companies in Japan, designating them as falling into one of three categories, namely:

  • (I) - Companies conducting business activities only in non-designated business sectors (subject to post-investment report only).
  • (II) - Companies conducting business activities in designated business sectors other than core sectors.
  • (III) - Companies conducting business activities in core sectors.

518 Japanese listed companies are designated as falling into category III. Including Toyota, Sony, Mitsubishi, Hitachi, Tokyo Electric and SoftBank.

Update on Japan’s FDI Regime: 518 Japanese Listed Companies Now Designated as Core Restricted Businesses | Orrick, Herrington & Sutcliffe LLP - JDSupra

Square Enix is Category I. So basically, if Square wanted to sell, it wouldn't be much of an issue for a foreign company to acquire them, if Square wanted to sell to that foreign company that is. If Square can't sell despite being Cat I then that's saying that basically no listed Japanese company can sell which we know isn't true.

Capcom is Cat I, Nexon and Nintendo are Cat II and Saudi Arabia's PIF recently acquired 5% in each with no issue at all. Cat III is where it is hardest, these are areas that Japan considers important to national security, anything over 1% will be thoroughly investigated. I know 5% is nowhere near a controlling stake but I can't find any law that specifically mentions controlling stakes, only this law which states anything over 1% will be investigated.

Once again, nowhere does it state it is impossible, nowhere does it state that Cat III companies are off limits, it's simply saying it will be a lot harder but harder doesn't mean impossible, this law is also clearly targeted at countries such as China, Russia, countries that Japan doesn't have the best relationships with because the main focus on this law is in the interest of national security.

I doubt Japan would have much issue with an American (who they're close allies with) company acquiring a Cat I/Cat II company. Cat III is a different issue, likely a lot harder, likely won't go through without a bunch of concessions and restrictions, not sure it would be worth it. I'd also say that a Japanese company has to want to sell to a foreign company too and this law likely protects against hostile takeovers.

Also, Sharp Corporation is on the list as Cat III but they're owned by Foxconn who are in Taiwan, once again, the law is clearly more targeted at countries that Japan doesn't exactly have the best relationship with, Taiwan is a close Japan ally so they've no issue with Foxconn's ownership.



zero129 said:
Shatts said:

1. Both are JP

2. Has a good relationship for a long time

3. Many "big" franchise exclusives

4. Some "rumors" hinting they are both interested such as SE selling off western studios "to kill of dead weight", "credible people" claiming Sony was interested in SE, SE looking to sell shares of their studios? Jim Ryan (CEO of SIE) claiming they are still going to acquire more.

I'm guessing people are pointing at somewhere along these and I don't think they are unreasonable. 

At the one time your both agreeing with me and going against what PI is trying to say.

If we go by exclusives maybe Epic are also looking to buy them? ..

If it was just the one thing, I don't think anyone would be speculating. 

One piece of evidence might be nothing by itself, but may be meaningful in the context of other points. 

I would throw out:

1.) The industry going through consolidation is pretty indicative that many companies that we wouldn't have dreamed would end up being sold, are getting sold. Like Activision for example.  

2.) A lot of people feel that Sony is going to, or will have to make some more major moves of their own. Square Enix feels like a target that makes the most sense. Take Two or EA would require Sony to go into a good bit of debt, which isn't impossible, but it makes it very, very, very unlikely. Ubisoft has too much overhead and isn't very profitable. Capcom is owned by a family, which will make that harder. Bandai, Konami have a lot of businesses outside of gaming (so does Square, but most of those businesses are at least something Sony has a hand in). 

3.) Most notably, these rumors didn't start from the know nothing gaming community though. They started with Grubb and Greg Miller. The latter of who, hasn't ever put out these kinds of rumors.  And the former, has a bit of a spotty track record, but frequently shows that he does know things. Just usually moreso on the Xbox side. And then we have the Eidos Montreal founder, who likely would have connections with people still at Square mentioning that Sony specifically wanted Square Enix Tokyo. 

It's probably not going to happen either way.  But it feels like this is the closest it ever has gotten to happening. 

Last edited by the-pi-guy - on 09 August 2022

Shatts said:
twintail said:

I'm not sure why the government would care about Square Enix.

Toyota? Sure maybe. But SE?

SE has one of the most valuable IPs popular in Japan. They even used Dragon Quest music in their Tokyo Olympic opening ceremony. I would be surprised if they didn't care about Square Enix. 

This doesn't strike me as important in the interests of the government. Anyhow, as Ryuu pointed out, SE is in the lowest priority category as designated by the Ministry of Finance Japan. Being acquired is a real possibility. 



If Sony were to purchase Square-Enix, would all there IP be elusive to the Playstation? Games like Bravely Default, Trials of Mana and the HD-2D games sell very well on Switch. They are in that AA mid-budget tier and I'm sure the profit on those games help fund the bigger games like Final Fantasy.



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WiiRHardcore said:

If Sony were to purchase Square-Enix, would all there IP be elusive to the Playstation? Games like Bravely Default, Trials of Mana and the HD-2D games sell very well on Switch. They are in that AA mid-budget tier and I'm sure the profit on those games help fund the bigger games like Final Fantasy.

I could see it going a few different ways. 

They could give Square more independence and let them choose platforms, similar to Bungie. I don't feel like that is very likely, as Bungie and Sony's goals match there. Bungie isn't going to skip PlayStation, whereas a lot of those Square titles have. 

I could see it being more made so that Square starts ensuring that those titles also hit PlayStation and Switch. This is personally the one I'd like to see, and I think it's not unlikely. 

I could also see Sony trying to transition Square. No changes in the short term, but start funding bigger exclusives like Forspoken, instead of Bravely Default.  

I'm sure someone will try to say, Sony won't do it unless they make everything exclusive. But this is not the generation to say never. At the end of the day, Sony wants to make money. A big part of that is exclusives absolutely. But a big part of that is also selling to larger groups of consumers, which is why they're making PC titles and starting to make mobile titles.

And frankly games like Bravely Default aren't the reason why Sony would want Square Enix, and there's not a crazy amount of incentive to make those games exclusive or stop making them.