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'Enix' & 'Square' Announce Merger

by Rainier on Nov. 26, 2002 @ 6:05 a.m. PST

Noticed on GamePRO that Enix announced early today that, effective November 26, they will begin to merge operations with Square to form Square Enix, a brand-new company created to compete in the world gaming marketplace on the same level as America and Europe's large third parties. The two companies aim to complete the merger by April 1, 2003 and will aim to build a new firm that will produce 80 billion yen ($656 million) in sales and 15 billion yen ($123 million) in profit by fiscal 2005.
"In the ever-changing world of entertainment software, the most important issue facing companies today is how quickly they can grow as the marketplace and opportunities for business expand and diversify," said a financial statement released by Enix today. "Enix and Square's response to this issue is the merger announced today...Together, we will aim to become producer of the highest-quality digital contents in the world."

As part of the merger, shareholders in both companies will receive 0.81 shares of Enix stock for every Square stock they hold. Square, in its current company structure, will be disbanded, and (on paper, anyway) Enix will absorb Square's assets and liabilities. However, Yoichi Wada, current president of Square, will head up the new company, suggesting that Square will have more power than Enix in the merger's final structure.

Both Square and Enix are large Japanese companies faced with recent difficulties competing with EA, Activision, Infogrames and the other third-party giants that dominate the game business in America and Europe. Square returned to profit in the last half-year after taking large losses from the failed Final Fantasy movie project, but still faces deep losses in operational profit from the lack of any major hit in 2002. Enix, meanwhile, is the producers of the blockbuster Dragon Quest series in Japan but hasn't been capable of releasing any other major sellers. Together, the two companies will form a massive third party that will virtually corner the market for RPGs in Japan, a springboard they will undoubtedly use to challenge the Western market more seriously than ever before.

Square and Enix will be holding a press conference at 3:30pm Japan time (1:30am Eastern time) to make the official merger announcement. Stay tuned for more details.

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