Tencent and Sony Interactive Entertainment jointly acquire 30.34 percent of FromSoftware

Through the allotment to third parties, Sixjoy Hong Kong will own 16.25 percent of the shares of FromSoftware and Sony Interactive Entertainment 14.09 percent. Kadokawa Corporation remains the company’s largest shareholder with 69.66 percent of the shares.

Download the full press release below.

1. Purpose and Reason of the Third-Party Allocation

The Kadokawa Group advocates a “global media mix with technology” as its fundamental strategy that combines the stable creation of intellectual property (IP) consisting of a variety of portfolio content, mainly in the publishing, video, game, web service – and education activities as well as the rollout of this IP on a global scale through the extensive use of technology, striving for sustainable growth and increasing business value from a medium to long-term perspective. FromSoftware is the driving force behind the game business as it has continuously created world famous works such as: Sekiro: Shadows Die Twice and Elden Ring, leveraging the advanced development power of game IPs. With a view to further expanding the Game Business, the Group recognizes enhancing the capabilities for creating, developing and deploying Game IP as one of the Group’s highest priorities. In accordance with this policy, the company has decided to have FromSoftware implement fundraising through a third-party allocation to Sixjoy and SIE, the planned allocations, for the reasons set forth below.

Tencent acquired capital in Guangzhou Tianwen Kadokawa Animation and Comics Co., Ltd., a consolidated subsidiary of the company, in 2016, and the two companies jointly promote their media mixing strategy targeting the Chinese market. In addition, the company, Sixjoy and Tencent Japan entered into a capital and business alliance agreement in October 2021 to strengthen their strategic alliance in anime and game. Tencent and its subsidiaries and affiliates (hereinafter the “Tencent Group”) are a global internet group providing communications, social, gaming, digital content, advertising, fintech and cloud services and the leading communications and social platform in the Internet industry operates in China.

Sony and its subsidiaries (hereinafter the “Sony Group”) and the company have developed a business cooperative relationship in a wide range of areas related to the Sony Group’s global Direct-to-Consumer (DTC) business, branded hardware business and games. In February 2021, the company made a third-party assignment with Sony as heir with the aim of strengthening its long-term relationship with the Sony Group, creating new IP of the company and maximizing the use of its existing IP in anime. and playing fields.

Through the implementation of the fundraiser, FromSoftware will strive to proactively invest in developing more powerful game IP for itself to enhance FromSoftware’s development capabilities and will strive to establish a framework that will significantly expand the scope of its own publications in the growing global market. In addition to these purposes, In order to increase the number of users in the global game IP market that FromSoftware creates and develops, FromSoftware has decided to perform the third-party assignment to Sixjoy within the Tencent Group, which has the strength to develop and implementing mobile games and other network technologies in the global market, including China, and SIE within the Sony Group, which has the power to deploy IP simultaneously and separately in games, videos and various other media in the global market.

2. Overview of Third Party Assignment

  • Payment Period: From September 7, 2022 to September 12, 2022
  • Number of new shares to be issued: 3,179 ordinary shares
  • Issue price: 11,450,000 yen per share
  • Capital to be acquired: 36,399,550,000 yen
  • Method of subscription or assignment (planned subscriber): By way of allotment by third parties (Sixjoy 1,703 shares, SIE 1,476 shares)
  • Shareholder ratio after issuance:
    • Kadokawa Corporation: 69.66%
    • Sixjoy Hong Kong Limited: 16.25%
    • Sony Interactive Entertainment Inc.: 14.09%

(Note) Payment in respect of the Third Party Allocation, which is expected to be made on September 7, 2022, may be made on any other day during the above payment period due to, among other things, procedures required for international wire transfer.

3. Use of capital (total paid-up capital: 36,399,550,000 yen)

  • Specific use of funds:
    • For enhancing FromSoftware’s capabilities to create and develop game IP.
    • To establish a framework that allows expanding the reach of FromSoftware’s proprietary publications in the global marketplace.

4. Overview of subsidiary subject to capital increase

    • Title: From Software, Inc.
    • Place: 2-26-2 Sasazuka, Shibuya-ku, Tokyo
    • Title / Name of Representative: Hidetaka Miyazaki, Representative Director and Chairman
    • Business content:
      • Planning, development, sales of game software.
      • Internet content planning and development.
    • Capital city: 268.5 million yen
  • Date of establishment: Nov 1, 1986
  • Major shareholders and their shareholdings:
  • Relationship between the listed company and the company concerned:
    • Equity ratios The Company owns 100% of the Company’s outstanding shares.
    • Employee relations Two company officers are seconded to the company concerned.
    • Business Relationships The Company and the relevant company have business dealings.

5. Scheduled Subscriber Overview

  • Title: Sixjoy Hong Kong Limited
  • Place: 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
  • Title / Name of Representative: Wang Zheng, director; Ai Ximin, director; Byun Jung-won Elizabeth, director; and Tse Cheuk Yin Tiffany, director
  • Business content: Licensing and publishing of mobile games.
  • Capital city: 1,000 Hong Kong dollars
  • Date of establishment: February 28, 2011
  • Major shareholders and their shareholdings:
    • Tencent Holdings Limited:
  • Relationship between the listed company and the relevant company:
    • capital relations:
      • The company concerned holds 9,724,400 shares (ratio of voting rights: 6.86%) of the Company’s shares (Note 1).
    • Personnel Relations:
    • Business relations:
      • The company and Tencent Group have had a strategic partnership in publishing since 2016 through a joint venture in Guangzhou, China. In addition, the company, Tencent Japan and the nominee Sixjoy entered into a business alliance agreement on October 29. , 2021 to strengthen their strategic alliance in the animation sector.

(Note 1): This item is based on the Major Shareholders’ Report filed by Sixjoy on November 16, 2021.

(Note 2): In the share subscription agreement that the Company and FromSoftware entered into with Sixjoy, the Company and FromSoftware have received a representation and warranty from Sixjoy that it is not an anti-social force and has no affiliation with anti-social forces. The company also commissioned JP Research & Consulting, Inc.

(Address: 3-7-12 Toranomon, Minato-ku, Tokyo; Representative: Keisuke Furuno, Representative Director), an independent research organization, to conduct an investigation. The report they produced states that there are no facts to indicate that Sixjoy is involved in antisocial forces. Based on the above, the company has determined that Sixjoy, Tencent, their officers and major shareholders have no relationships with antisocial forces.

  • Title: Sony Interactive Entertainment Inc.
  • Place: 1-7-1, Konan, Minato-ku, Tokyo
  • Title / Name of Representative: Jim Ryan, Representative Director and Chairman
  • Business content:
    • Planning, development and sales of hardware, software, content and network services for PlayStation.
    • Planning, development and sales of “toio”, software and content.
  • Capital city: 110,000,000 yen
  • Date of establishment: Apr 1, 2010
  • Major shareholders and their shareholdings:
  • Relationship between the listed company and the relevant company:
    • capital relations:
      • Sony, the parent company of the relevant company, holds 2,844,950 shares (voting rights ratio: 2.01%) of the company’s shares (as at the end of March 2022).
    • Personnel Relations:
    • Business relations:
      • The company enters into transactions such as the sale and purchase of finished products and services with Sony and its affiliates.

(Note) In the stock subscription agreement entered into with SIE, the Company and FromSoftware received a representation and warranty from SIE that it and its officers are not an antisocial force and that they have no affiliation with antisocial forces with respect to the stock subscription agreement. Sony, the parent company of SIE, is listed on the Tokyo Stock Exchange. By affirming its basic stance on the elimination of antisocial forces and the establishment of relevant systems for it, expressed in the Corporate Governance Report submitted by Sony to the Tokyo Stock Exchange, Inc. on July 5, 2022. filed, cases were raised regarding its internal control systems, the company determined that Sony and its officers had no affiliation with anti-social forces.

6. Third Party Assignment Schedule

  • Resolution of the Board of Directors and the General Meeting of Shareholders of FromSoftware: August 31, 2022
  • Date of Share Subscription Agreement in respect of the allotment of third parties: August 31, 2022
  • Payment Period: From September 7, 2022 to September 12, 2022

(Note) Payment for this third-party assignment is scheduled for September 7, 2022.

7. Future Outlook

The company believes that the third party allotment will help improve the Group’s business value in the medium to long term, while reducing the impact of the third party allotment on the company’s consolidated financial results for the fiscal year ended March 31. 2023 at the time of this report is expected to be small. When it is necessary to release information, the company will provide the information immediately.

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