Sega Sammy Holdings Inc announced on Wednesday that it would transfer 85.1% of its shares in consolidated subsidiary Sega Entertainment (Tokyo), which operates amusement facilities, to amusement machine company Genda. The transfer price has not been disclosed.
Sega Sammy have decided to withdraw from the domestic game center business within a year of this sale, with the operation of facilities having been significantly impacted by the coronavirus pandemic. With the transfer of the shares, Sega Sammy’s voting rights ratio in Sega Entertainment (Tokyo) will be 14.9% and Sega Entertainment (Tokyo) will no longer be a consolidated subsidiary.
“As Amusement Center Operations in the Entertainment Contents Business is strongly affected by COVID-19, utilization of facilities has declined remarkably and a significant loss was recorded in 1Q of the fiscal year ending March 2021,” Sega Sammy said in a statement. “In addition, despite the recent recovery trend, the situation remains uncertain.
“We have been considering various options in order to adapt to these changes in business aiming for improvement of the profitability and early recovery of sales of the Amusement Center Operations area.
“In this process, we have been discussing the transfer of Sega Entertainment (Tokyo) shares to Genda, a company that has a strong desire to expand its Amusement Center Operations business and has decided to conclude the share transfer agreement at a Board of Directors meeting held today.
“Accordingly, we reduce the book value of non-current assets and others held by Sega Entertainment (Tokyo) to the recoverable amount through transfer of shares, and will record this reduced amount of JPY20 billion (US$191.3 million) as extraordinary losses for the fiscal year ending March 2021.”
Sega Sammy recently reported a loss of JPY3.30 billion (US$31.3 million) for the three months to 30 June 2020, down from a profit of JPY1.72 billion (US$16.3 million) on reduced sales across all business segments.
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