Japanese gaming conglomerate Sega Sammy Holdings Incorporated has reportedly announced the signing of an agreement that will see it offload an 85.1% stake in its land-based arcades operating arm to local entity Global Entertainment Network for Dreams and Aspirations (GENDA).
According to a report from Inside Asian Gaming, the Tokyo-listed behemoth did not reveal the final price for the massive interest in its Sega Entertainment Company Limited subordinate but did detail that the transaction is expected to close at the end of the year to take its remaining share down to 14.9%.
Sega Sammy Holdings Incorporated also reportedly explained that the arrangement is all part of a cost-cutting plan that is destined to see it completely exit Japan’s amusement centers market by the end of 2021 with Sega Entertainment Company Limited ceasing to be one of its consolidated subsidiaries.
Responsible for an extensive estate of amusement arcades, bowling alleys, cafes and restaurants spread across Japan, Tokyo-headquartered Sega Entertainment Company Limited has recently been hit hard by the coronavirus pandemic as most of its venues were forced to close or temporarily reduce the scale of their operations. The source clarified that this same downturn led Sega Sammy Holdings Incorporated to record a drop of nearly 300% year-on-year in second-quarter earnings to a loss of about $31.3 million as overall comparable sales decreased across almost all of its business segments.
Sega Sammy Holdings Incorporated reportedly declared that its amusement arcades business has been ‘strongly affected’ by the coronavirus pandemic and racked up ‘a significant loss’ for the first three months of the year. The colossus furthermore purportedly proclaimed that ‘this situation remains uncertain’ despite the recent emergence of a slight recovery and that the sale will allow it to reduce its upcoming annual loss by around $191.3 million.
Reportedly read a statement from Sega Sammy Holdings Incorporated…
“We have been considering various options in order to adapt to these changes in business so as to aid in the profitability and early sales recovery of the amusement centers operations area. In this process, we have been discussing the transfer of shares in Sega Entertainment Company Limited to GENDA, a company that has a strong desire to expand its amusement centers operations business.”