(Bloomberg) -- Sony Group Corp. is exploring a takeover of Japanese publisher Kadokawa Corp., potentially expanding its content portfolio and tightening its grip over the maker of hit role-playing game Elden Ring.
Tokyo-listed Sony has been studying a possible offer for Kadokawa and the two companies have held talks, according to people familiar with the discussions. Deliberations are ongoing and Sony could decide against proceeding with a formal proposal, they added, asking not to be named as the matter is private. The two entertainment conglomerates are among the main shareholders in FromSoftware Inc., the creator of hit PlayStation games such as Elden Ring and Bloodborne, which may be the biggest draw for Sony’s interest.
“No doubt Sony wants to get its hands on FromSoftware, which has been the jewel in the crown of the publishing firm,” said Amir Anvarzadeh of Asymmetric Advisors. “It’s a quality game studio, which I have long argued should be bought by other third parties.”
Sony’s shares gave up their gains on Tuesday after Reuters reported talks over a potential deal, while Kadokawa was bid to the upper daily limit after the report emerged. “Nothing has been decided, and we have not made an announcement,” a Kadokawa spokesman said. A representative of Sony declined to comment.
Kadokawa’s expansive library of manga, anime, film and gaming content can help Sony’s push to enhance and better capitalize on its IP portfolio. The smaller company, valued at about $2.8 billion before Tuesday, this year released a manga series based on Elden Ring, authored by an award-winning artist.
Shares of games publisher Bandai Namco Holdings Inc., which is in charge of overseas sales and marketing of Elden Ring, plunged as much as 8.7% after news of Sony’s interest in Kadokawa. The expectation is that, if Kadokawa were to come under the Sony Group umbrella, Bandai Namco would lose the revenue it generates from Elden Ring sales, said Tomoaki Kawasaki, a senior analyst at Iwaicosmo Securities.
“Kadokawa has a lot of powerful content centered around anime,” Kawasaki said. Sony already owns Aniplex Inc., and adding Kadokawa’s lineup would make Sony “a formidable global competitor in anime,” he said.
Kadokawa has been the subject of takeover speculation in recent years. In 2024, it spurred a public backlash after revealing that a cyberattacker had made off with the information of more than 250,000 people, including students. In August, it cut its annual net income forecast by about 28%.
--With assistance from Mayumi Negishi, Haruka Iwai and Alice French.
(Updates with information from people familiar with the matter from first paragraph)
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