A pending merger between fun-and-games powerhouses Sega Enterprises and Bandai was called off suddenly Tuesday when Bandai's board of directors decided the two companies wouldn't be such a good fit after all.
What scotched the deal was opposition from mid-level Bandai execs, who apparently saw the culture of their family-run business at odds with Sega's more button-down corporate ways. Sega's poor showing in the videogame sweepstakes against rivals Nintendo and Sony may have been another factor, especially as sales boom for Bandai's Tamagotchi virtual pets.
The merger has been in the works since January, and was scheduled to be finalized in October. Under the original stock-swap plan, Sega would have taken control of Bandai's assets - a prospect that prompted many Bandai employees to write angry letters to their company's management.
Opposition to the deal grew so intense that Bandai's board met to review the plan Monday, and subsequently informed Sega that the merger was off. As a face-saving move, Bandai offered to enter into a less formal business alliance, and Sega announced that this would be acceptable.
According to some reports, many Sega execs also had reservations about the deal, fearing they would gain little in their efforts to restore life to the company's game titles. They also worried that Bandai employees would not respond well to Sega's more traditional management practices.
Bandai was founded in 1950 and is one of Japan's oldest toy makers. The company was once content to make cheap "made-in-Japan" products for the world's kids, but became more sophisticated in its dealings after striking gold with Ultraman and the Mighty Morphin Power Rangers. Bandai has since experimented with other markets, including a tie-up with Apple, but still finds itself most adept at manufacturing toys.
Sega has been around since 1960, and was once considered a formidable competitor for Nintendo in the home-arcade business. The company's 32-bit Saturn machine hasn't performed as well as expected, and Sega has lost ground to the more popular Sony Playstation. Bandai has about 1,000 employees, and is projecting about US$900 million in sales for the fiscal year ended on 31 March. Sega has almost 4,000 workers, and is projecting about $3 billion in sales for the year.
