Namco sells movie subsidiary...again

TOKYO--After a failed first attempt at selling its movie subsidiary, Nikkatsu, Namco today announced new plans to sell the company to Index Corporation, a mobile-phone content distributor in the country. Under the basic agreement, Index will acquire the majority of Namco's 74.4 percent stake in Nikkatsu. While specific figures are still being discussed between the two companies, the acquisition is expected to cost Index an estimated 4 billion yen ($36.3 million). However, the transaction has to be completed by September 28, just one day before Namco's merger with Japan's largest toymaker, Bandai. Namco will hold on to some of its shares in Nikkatsu even after the deal.

Namco announced plans to sell Nikkatsu to Internet service provider USEN in April, but the deal soured last month after strong objections by the film company's union. The same result will not happen this time according to Index, which says its planned acquisition of Nikkatsu has already been approved by the workers at the movie company.

Index's acquisition would allow it to make use of Nikkatsu's substantial film library for its services, including on-demand video distribution through its subsidiary, Neo Index Corporation. The company is also looking into the possibility of releasing Nikkatsu's movies through its business partners to the overseas market, including North America, Europe, and Asia.

Index's acquisition of Nikkatsu may also give it some ties to Namco and Bandai in the future, which means the mobile content distributor will have connections to two of the largest toy and game makers in Japan. Index acquired Konami's 22.2 percent stake of Takara on April 25, and it has been heavily involved in the merger of Takara and Tomy that was announced in May.

Index shares rose by nearly 5 percent at one point during trading hours but closed at 150,000 yen ($1342.49), up more than 1 percent from yesterday. Namco's share price fell a little under 2 percent to 1,797 yen ($16.32).

Nikkatsu was founded in 1912 and is considered Japan's oldest motion-picture studio and owner of theaters. At one time, the firm operated more than 70 percent of all Japanese theaters, but the company fell on hard times after World War II. During the 1970s, Nikkatsu Corp. was reduced to producing soft-core pornography, and it filed for bankruptcy in 1993. Nikkatsu made a comeback after Namco invested approximately 3 billion yen ($28 million) in the company that same year. In 1997, Nikkatsu was made into a Namco subsidiary after it helped produce and distribute the film Neon Genesis Evangelion.