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Microsoft, EA may make bid for Sega

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Troubled videogame company Sega, which had announced plans to merge with Sammy Corporation, may have two new suitors: Microsoft and Electronic Arts.

The Asian Wall Street Journal reported on Thursday that both companies were considering buying all or parts of Sega, although no formal talks were ongoing.

Earlier this month Sega said it was planning to merge with Sammy Corporation, a maker of pinball gaming machines and software. The transaction was expected to be worth at least USD1.1 billion, and at the time, Sammy President Hajime Satomi said the merger would take place in October.

But reports say that insiders at Sega -- which makes software for platforms including Microsoft Xbox, PlayStation and Nintendo's GameCube -- were unhappy about the proposed marriage with Sammy.

Sega abandoned its console ambitions in 2001 when its Dreamcast console delivered disappointing sales, but it has continued to struggle with falling sales, and earlier this month it cut its profit forecast by 90 percent for the year.

Games industry analysts said that both Electronic Arts and Microsoft are certainly cash-rich enough to purchase the ailing developer, which controls valuable game characters like Sonic the Hedgehog. Sega would give Microsoft access to a great deal of content for its Xbox platform, especially in areas like sports and kids' games. But speaking to ElectricNews.Net, one games analyst said it may make more sense for EA to buy Sega instead.

"That's for one reason -- Sega is producing games on several platforms, and if Microsoft take it over, it will need to get rid of those and develop only for Xbox," he said. "It might make more sense from an economic point of view for EA to buy it."

Following the reports, Sega's shares soared more than 15 percent to YEN740 in Tokyo, reversing a downward trend that accelerated two weeks ago when the deal with Sammy was announced.

© ENN

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