CyberWorks Japan to Buy U.S. Game Software Operations (Update2)
By Junko Fujita
Tokyo, Feb. 23 (Bloomberg) -- Pacific Century CyberWorks Japan Co., a unit of Asia's No. 2 Internet investor by market value, said it will buy the game unit of Colorado-based Circadence Corp.
The purchase will be made through a private placement of PCCW Japan stock valued at 4.4 billion yen ($38 million), PCCW Japan said. The number of shares will be determined by dividing $38 million by 775 yen, converted into U.S. dollars using the average exchange rates over a 60-day period, the companies said.
The Japanese unit of PCCW will exchange 5.6 million new shares for the rights to Circadence's VR-1 online game operations, the companies said. The deal will give Circadence a 5.3 percent stake in Pacific Century CyberWorks Japan. The shares closed yesterday at 615 yen.
The acquisition is part of PCCW Japan's strategy of producing game content to be exported across Asia, a move the company initiated through its earlier purchase of Jaleco Ltd., an unprofitable Japanese arcade game maker.
``Gaming is a critical part of our strategy,'' said Todd Bonner, PCCW Japan chief executive officer. ``The reason why we are going into gaming is that gaming is the area where online players subscribe and pay money to play. That is a successful model for the Internet.''
The company, citing estimates by consulting firm AT Kearney, said online game users will reach 70 million by 2005 from 10 million now, generating more than $8 billion revenue in the U.S., Japan and Europe.
VR-1 allows for complicated online games to be played by multiple players even at data-transmission speeds of a normal phone line.
The stock's trading on Japan's over-the-counter market was halted before the market opened after the Nihon Keizai newspaper reported the planned purchase in its morning edition.
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