Sony Music Entertainment Japan is set to become the largest shareholder of GungHo Online Entertainment by acquiring an approximately 22.9% stake in the company for around 28.6 billion yen. Through a capital and business alliance, the two companies plan to connect GungHo games such as 'Puzzle & Dragons' with Sony Music Group IP, as well as explore joint game development and operations.

On August 28, Sony Music signed a share transfer agreement to acquire all 12,006,500 common shares of GungHo held by its existing largest shareholder, SON Financial LLC, at 2,385 yen per share. The total transaction value is 28,635,502,500 yen. The shares will be transferred via an off-market bilateral transaction, with delivery scheduled for December 30.

Once the transaction is completed, Sony Music will hold 22.93% of GungHo's outstanding shares (excluding treasury shares) as of June 30, corresponding to 23.29% of voting rights. As a result, Sony Music will become GungHo's largest shareholder, while SON Financial will divest all of its holdings.

However, signing the agreement and completing the stock acquisition are separate matters. While the two companies signed the share transfer agreement and capital and business alliance agreement on August 28, the transfer of shares has not yet occurred. Execution of the transaction and alliance is subject to conditions including filing a notification with the Japan Fair Trade Commission, the expiration of the waiting period, and receiving notice that no cease-and-desist order will be issued. Sony Music noted that obtaining approvals and authorizations from relevant authorities is also a condition for completing the transaction.

The business alliance has also not yet reached the stage of finalizing specific development projects. According to GungHo's official disclosure, details will be determined through further discussions between the two companies. The scope currently announced includes considering joint development and joint operation of smartphone, console, and PC games operated and distributed by GungHo, including 'Puzzle & Dragons' for iOS and Android, promoting in-game collaboration projects, and exploring new game concepts utilizing Sony Music Group IP.

Whether specific games will be jointly developed, as well as the business structure, production schedule, and release platforms, have not been announced. The two companies have only outlined a general direction of combining GungHo's intellectual property and game development/operational expertise, such as with 'Puzzle & Dragons', with Sony Music Group's experience in the entertainment sector.

GungHo will maintain its management independence as a listed company following the transaction. Sony Music also agreed to respect GungHo's management independence for as long as it remains a listed company. GungHo stated that while it expects the alliance to contribute to long-term business growth and enhancement of corporate value, the currently anticipated impact on its financial performance is minimal.