Japanese pachinko hall operator Dynam is set to add another five halls to its asset base after reaching an agreement with a company called Keiai to acquire its pachinko arm.
According to details filed by Dynam’s parent company, Dynam Japan Holdings Co Ltd, the acquisition will take place by a way of an “absorption-type company split” and come at a cost of JPY3.8 billion (US$27.4 million). When complete, Keiai’s pachinko business will become a wholly-owned subsidiary of Dynam.
The business itself, Dynam explained, includes five pachinko hall operations in Gifu Prefecture of Japan, which together generated net profit after tax of JPY605 million (US$4.4 million) in FY21 and JPY583 million (US$4.2 million) in FY22. The net asset value of the business as of 31 October 2022 was approximately JPY1.29 billion (US$9.3 million).
“The current situation in the pachinko hall industry shows a downward trend in the market size and the number of machines installed, with an increase in the number of suspensions and closures of competitors in the industry, and this trend is further accelerated by the recent COVID-19 pandemic,” Dynam said in explaining the reasons for the acquisition.
“Dynam’s existing halls are also facing the same difficult situation, and the Board expect that it will be difficult to maintain the business in the future if the current situation continues.
“Under these circumstances, in order to enhance the Group’s future corporate performance, the Group has been developing hall openings in business areas with a large market size. However, since the Group cannot ensure that it can secure customers by opening new halls, the Group has chosen to open halls by acquiring businesses that have existing customers in the new hall area. Keiai operates pachinko halls mainly in Gifu Prefecture of Japan, and Dynam will acquire five of these halls in Gifu Prefecture through the Absorption-type Company Split.
“Dynam has conducted due diligence in the Acquisition and expects to acquire these facilities at an appropriate acquisition price, which is expected to result in an annual increase of net profit of more than JPY300 million.”