Sony Kadokawa acquisition is off, Sony buys 10% of company shares instead

Rather than buying Kadokawa Corp for multiple billions of dollars, Sony has chosen to invest in the manga giant instead.

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Sony will not be acquiring Kadokawa after all. Both companies have announced a strategic partnership that sees Sony purchasing 10% of Kadokawa's stock for 50 billion yen, or about $319.5 million. That's a lot less than it would have cost to buy out Kadokawa completely.

Despite Kadokawa's commanding presence in the manga/anime markets (not to mention its gaming might thanks to FromSoft and others), Sony making this kind of investment makes more sense than an outright buyout. The news comes at a time when Sony is aggressively slashing its budgets and spending in an effort to boost profitability, and new consolidation could take years to unravel. Based on Kadokawa's market capitalization, it could have cost Sony over $3.3 billion to buy out Kadokawa's existing shares.

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Sony is currently on its 5th Mid-Range plan, which is a term that refers to a series of strategies laid out to investors to show how Sony will spend its multi-billion dollar treasure trove across a 3-year period.

In the 5th Mid-Range Plan, Sony has allocated 1.8 trillion yen ($11.5 billion) for "strategic investments," which includes everything from share buybacks to outright company acquisitions, similar to Sony's buyout of Bungie or Insomniac Games.

Buying Kadokawa would eat up a big chunk of this 3-year cache of spending money--nearly 29% of the total would be needed to buy out $3.3 billion of Kadokawa's shares. Remember that acquisitions are only a part of what Sony will spend this money on. Case in point: Sony had already spent over $247 million of this total buying its own shares back as of October 2024.

Here's what Sony said in the press release announcement:

KADOKAWA CORPORATION ("KADOKAWA") and Sony Group Corporation ("Sony") today signed a strategic capital and business alliance agreement, agreeing to conduct a third-party allotment by KADOKAWA to Sony on January 7, 2025, with Sony acquiring 12,054,100 new KADOKAWA shares for approximately 50 billion yen. With the acquisition of the new shares, Sony will become KADOKAWA's largest shareholder, holding approximately 10% of its shares, including the shares Sony previously acquired in February 2021.

KADOKAWA and Sony historically have collaborated on various projects, and through this capital and business alliance, intend to further strengthen our collaboration to maximize both companies' IP value globally and facilitate wider and deeper collaboration, such as potential joint investments in the content field, joint discovery of new creators, and joint promotion of further media mixes of both companies' IP. In the future, the two companies plan to discuss specific initiatives for collaboration, such as initiatives to adapt KADOKAWA's IP into live-action films and TV dramas globally, co-produce anime works, expand global distribution of KADOKAWA's anime works through the Sony Group, further expand publishing of KADOKAWA's games, and develop human resources to promote and expand virtual production.