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Last Updated: Thursday, 8 May, 2003, 08:56 GMT 09:56 UK
Sega mergers fall apart
Pachinko parlour
Sammy wanted to shift into video games
Japanese games firm Sega, the subject of endless merger speculation, has turned its back on two takeover proposals on the same day.

It called an end to talks for a merger with Sammy, a company that makes machines for pachinko, a Japanese version of pinball.

And just hours later, it rebuffed a takeover offer from Namco, a rival in the video games market.

The decisions leave Sega's future in question, as the search continues for partners to help bolster its flagging finances.

Sega, which lost 17.8bn yen (96m; $149m) last year, is currently studying a takeover offer from computer game rival Namco, and has been rumoured as a merger partner for a long list of other firms, including Microsoft and US games maker Electronic Arts.

Different games

A deal between Sega and Sammy had long looked tricky to bring to completion.

The two firms are in different markets: while Sega focuses on computer games, Sammy produces machines for pachinko, Japan's popular version of pinball.

Pachinko has proved a profitable business - Sammy earned 23.9bn yen last year - but it is no longer growing, as young players prefer video games to pinball parlours.

Sammy had hoped to use its pachinko cash to buy a niche in the computer games market, but the two firms have been unable to agree terms.

Partner snubbed

The failure to agree terms with Namco has not yet been explained; most analysts had thought the two firms natural partners.

In a statement, Namco said only that Sega had told them it "was not in a situation to give a specific answer to the proposal".

Sega, once one of the leaders of the video games market, has seen its reputation - and financial position - suffer in recent years.

It has moved out of games console manufacturing to concentrate on software, but is seen as struggling to compete in a market increasingly dominated by Microsoft and Japan's Nintendo and Sony.

Namco pursues Sega
17 Apr 03  |  Business
Sega hurts as US sales fall
20 Nov 02  |  Business

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