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- Sony is in talks to acquire Japanese media company Kadokawa.
- Kadokawa's shares rose 23% following the news, with a market cap of $2.7 billion.
- Sony aims to expand its entertainment portfolio, leveraging Kadokawa's successful franchises.
NEW YORK — Sony is in talks to acquire Kadokawa, the Japanese media powerhouse behind the game Elden Ring, two sources familiar with the matter said, as the technology giant looks to add to its entertainment portfolio.
The talks between the two sides are ongoing and, if successful, a deal could be signed in the coming weeks, the sources said, though Sony and Kadokawa both refused to comment on the matter.
The merger would mark Sony's second acquisition of a game-developer company, following its purchase of Bungie, creators of Destiny and Halo, for $3.6 billion in early 2022.
Kadokawa's shares closed up 23% at its daily limit, with its market capitalization around $2.7 billion prior to the Reuters report. Sony's shares closed up 0.6%.
Sony already has a 2% stake in Kadokawa and a stake in Kadokawa-controlled FromSoftware, the developer of the critically-acclaimed fantasy action role-playing game, a collaboration between veteran game director Hidetaka Miyazaki and "Game of Thrones" author George R.R. Martin.
The game, which depicts an atmospheric world where players must battle monsters and more on their quest to repair the Elden Ring, has sold 25 million units and is available on all platforms, including Sony's PlayStation. An expansion, Shadow of the Erdtree, sold 5 million units in the three days after its release in June.
About Kadokawa
Kadokawa began as a publisher in 1945 but has expanded into games, anime, events and figures with franchises such as Re:Zero, in which a teenage boy is summoned to a fantasy world.
Other Kadokawa franchises include "Delicious in Dungeon," a manga series adapted into anime about adventurers exploring dungeons and eating monsters they encounter.
The business, on the other hand, has been buffeted in recent years after it was hit by a cyberattack in June that resulted in a data leak and affected activities, and Tsuguhiko Kadokawa, the son of the company's founder, resigned as chairman after he, along with another company executive, were indicted on bribery charges related to the Tokyo Olympics two years ago.
About Sony
Known as the inventor of the Walkman, Sony has transformed from an electronics manufacturer into an entertainment and technology juggernaut spanning movies, music, games and chips.
Sony, which has a market valuation of around $114 billion, focuses on anime, whose growth worldwide has been fueled by the spread of streaming services and greater familiarity with Japanese culture, though the company scrapped the $10 billion merger in January of its Indian arm with Zee Entertainment Enterprises, saying some conditions were not met.
Still, the group has also had success in extending the reach of its own franchises, with the popular video game series The Last of Us adapted into an equally praised HBO drama.
"Loveable characters and intellectual property can live for 30, 50 or 100 years," Sony CEO Kenichiro Yoshida said last year. "That's something we want to make an investment in for sustainable growth."
