Square Enix, itself the result of a merger just two years ago and the powerhouse keeper of the Final Fantasy franchise and other popular console role-playing games, today said it was prepping for a friendly takeover of rival Taito, a publisher with strengths in the arcade and mobile sectors. Square also eyed Taito because the company has a much more robust business presence in Europe.

In a joint press conference helmed by Square Enix president Yoichi Wada, it was revealed the companies have been in talks since last April. This summer, the two publishing giants concluded that a Square Enix buyout was the most profitable and efficient way to proceed.

Recently, Taito's reported full-year revenues showed a 51.1 percent drop in profits. For the same reporting period, the full year ending March 2005, Square Enix reported a 35.8 percent rise in its group net profit.

"We decided to go with a takeover bid," Wada said today. "It's the quickest way for us to turn Taito into a subsidiary."

He added that takeover bids are generally viewed negatively in Japan, and it was essential that the announcement be made jointly. Wada also clarified that mobile phone maker Kyocera, which owns a 36-percent stake in Taito, was also in favor of the terms. Kyocera will sell its $218 million worth of shares back to Taito.

The offer sees Square Enix paying a 12-percent premium over Taito's closing-share price today. The offer is open from tomorrow to September 21. Square Enix said it will rescind the tender offer if it fails to acquire at least 67 percent of Taito stock, but it is intent on alternate takeover plans if the bid should fail.

While Square Enix and Taito are both high-profile companies, their businesses have almost no overlap. In addition to the Final Fantasy games, console-centric Square Enix is known for the popular Dragon Quest series. Taito, the creator of Space Invaders, drives most of its revenues from game arcades and indoor amusement facilities. Taito does compete slightly in the home game market, but its library of games are mostly low-budget SKUs.

In terms of global reach, Square Enix has strength in North America, while Taito has better distribution in Europe.

Another major selling point is Taito's strength in the mobile-phone sector, where it makes double the revenues of Square Enix's mobile division.