Photo Credit: GungHo Online Entertainment
Sony Music Japan will acquire a 23.29% stake in video game developer GungHo Online Entertainment, making Sony Music the company’s largest shareholder.
GungHo Online Entertainment, the Japanese video game developer best known for its massive mobile hit Puzzle & Dragons, has a new primary shareholder. Sony Music Entertainment Japan will acquire a 23.29% stake in the company through an off-market bilateral transaction from major shareholder SON Financial. The total offering price is 28,635,202,500 yen (approximately $178.7 million) at 2,385 yen ($14.89) per share.
The deal is expected to close on December 30, pending regulatory approvals, and will make Sony Music Entertainment the largest shareholder and affiliated company of GungHo Online Entertainment. Sony Music Entertainment Japan’s parent company, Sony Group Corporation, will also qualify as an affiliated company.
Additionally, both parties have entered into a capital and business alliance agreement, which will explore joint development and operation of smartphone games, console games, and PC games distributed by GungHo; promotion of collaboration initiatives for GungHo’s games; and exploration of new game projects, including those using IP from Sony Music Entertainment Japan and its affiliates.
GungHo Online Entertainment will maintain its management independence as a publicly listed company on the Tokyo Stock Exchange Prime Market following the deal’s closure.
In 2013, the gaming company made $446 million in one quarter alone thanks to the success of Puzzle & Dragons, which generated $1.43 billion that year. More than a decade later, it’s still one of the company’s biggest properties.
GungHo has made many smaller acquisitions since its sudden meteoric rise and then sold off many of those smaller companies over the last five years. In late 2021, GungHo sold Grasshopper Manufacture to China’s NetEase, and in February 2024, it sold Acquire Corp. to Kadokawa Corporation.
Last year, the investor fund Strategic Capital, which holds a joint 8% stake in the company’s shares, launched a shareholder bid to oust CEO Kazuki Morishita. The shareholders argued that Morishita had allowed the company to “stagnate” as a “one-hit wonder” since its initial success with Puzzle & Dragons. They also claimed Morishita was vastly overpaid, with a salary exceeding that of Nintendo’s CEO, Shuntaro Furukawa. Notably, Puzzle & Dragons has maintained its position as a continuous success for the company.