Sega and Bandai will merge by October

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TOKYO -- Japanese electronics games group Sega and Bandai, the world's fifth largest toy maker, are to merge and create Sega Bandai, one of the world's biggest multimedia entertainment groups with consolidated sales of some $3bn.

The merger, which is scheduled for completion by October 1 this year, is seen by some industry analysts as a defensive move against competition from rival Japanese groups Sony and Nintendo, the U.K.'s Financial Times newspaper reports.

Sega is the second largest manufacturer of computer games for the home, behind Nintendo, and the largest arcade game maker. However, in the 32-bit games market, Sega's Saturn's share is decreasing in the face of the challenge from Sony's PlayStation, as well as Nintendo 64. PlayStation is the No 1 player in both the Japanese and overseas markets.

Bandai owns many characters popular with children, such as Power Rangers. However, its Pippen Power Player CD-Rom-based game developed with Apple Computer is not making profit.

Bandai shareholders will be able to exchange one share for 0.76 Sega shares. Mr. Ohkawa, chairman of Sega will be chairman of Sega-Bandai; Mr. Nakayama, president of Sega, will be vice chairman and Mr. Yamanashi, president of Bandai, will be president.

The two companies believe that Sega Bandai will expand their existing markets as Sega is more popular in the teen sector and Bandai is strong in the kids market. Also, Bandai has many characters which can be used in game software.

Copyright January 1997, Crain Communications Inc.

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