Following a report that Square Enix was potentially exploring going private, the company behind hit franchises like Final Fantasy has released a statement denying the claims. Japanese business magazine Sentaku originally reported that Square Enix was exploring this possibility and that foreign investment funds were rumored to be interested in a deal, which saw Square Enix’s stock rise by 7%.
“The September issue of the monthly magazine Sentaku carried a report regarding the possibility of Square Enix. (the Company) going private,” Square Enix wrote in a press release. “However, this information was not announced by the Company. No consideration is currently being given within the Company to taking the Company private.”
Even if Square Enix were to change its mind, buying back all shares wouldn’t be cheap. Depending on daily stock fluctuations on the Tokyo Stock Exchange, Square Enix has a Market Capitalization of roughly $6.67 billion to $6.82 billion. While that’s pretty big, Square Enix still pales in comparison to the market valuations of its fellow Japanese gaming giants, Nintendo ($64 billion) and Capcom ($11.33 billion). Where the company stands out is that it has a stable revenue base, and recent financial overhauls have improved its capital efficiency.
Square Enix is also more than just a video game developer and publisher, as it also publishes manga magazines and graphic novels under its Gangan Comics imprint, operates arcade franchises under the Taito Corporation banner, and it has a massive merchandising arm. Looking ahead, Square Enix has plenty of games in the pipeline, including the upcoming releases of Final Fantasy Resonance and Final Fantasy 7 Revelation.
That would make it a lucrative prospect for an offer to go private, as seen in the case of Saudi Arabia’s Public Investment Fund–alongside Donald Trump’s son-in-law Jared Kushner’s private equity firm Affinity Partners and investment company Silver Lake–taking ownership of Electronic Arts last month, concluding a $55 billion deal.
Unfortunately, this takeover has left EA saddled with billions in debt, and it’s feared that mass layoffs will follow as the company aims to cut costs.
