Japan’s Sammy to Buy Sega Stake

Sammy Corp., a major Japanese pachinko pinball-machine maker, said Monday it plans to buy a 22.4% stake in Sega Corp. to become the largest shareholder in the video game software maker.

The announcement comes after talks between Sega and Sammy over a possible tie-up fell through in May. Similar talks between Sega and rival game maker Namco also broke down in May.

Sammy will spend $419 million to buy the stake from CSK Corp. Sammy’s president, Hajime Satomi, said his company might add to its stake in Sega in the future.

Under Japanese law, a majority stockholder needs a 33% stake to have decision-making power.

Sammy, which makes the popular vertical pinball games set up in parlors across Japan, has been trying to expand into other areas as growth in its own industry slows. Analysts said Monday’s purchase could trigger a round of consolidation in the video game sector, where the costs of game development have soared.

Sega returned to profitability last fiscal year. It stopped producing its money-losing Dreamcast game console in 2001 to focus on game software amid intense competition from Sony Corp.’s PlayStation2 and others.