Pachinko giant Dynam has announced that it is acquiring a pachinko business from Japanese firm Keiai for JPY3.8 billion ($27.2 million).
According to a filing on Thursday, the Hong Kong-listed pachinko operator said that upon completion of the company split, the pachinko operation will become wholly owned by Dynam and be consolidated into its financial statements.
The acquired pachinko business consists of five pachinko hall operations in Gifu Prefecture of Japan, whose net asset value was approximately JPY1.292 billion ($9.28 million), according to the report dated 31 October 2022.
The target business profit stood at JPY583 million ($4.17 million) for the year ended 30 October 2022.
Dynam believes that the acquisition is beneficial to the company, as 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”.
“This trend is further accelerated by the recent COVID-19 pandemic. Dynam’s existing halls are also facing the same difficult situation, and the Board expects that it will be difficult to maintain the business in the future if the current situation continues,” notes the firm.
“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,” the statement reads.
Dynam is Japan’s second-largest pachinko hall operator. The firm’s consolidated net profit attributable to owners for FY23 was JPY1.81 billion ($13 million), down 63.9 percent yearly, despite total revenues rising by 11.5 percent to JPY117.2 billion ($841 million).
According to the company, the increase in depreciation expenses of its pachinko and pachislot machines and extremely high utilities expenses are the main reasons for a substantial decline in profit for the financial year ended 31 March 2023.
