Sony (SONY.US) is currently in talks to acquire the Japanese publisher Kadokawa Group, in order to further expand its extensive IP library.

Foreign media cited sources familiar with the matter as reporting that Sony Group (SONY.US) is in discussions to acquire Japanese content publisher Kadokawa Corporation. According to reports, if the negotiations progress smoothly, the two companies may sign an agreement in the coming weeks. Based in Tokyo, Sony is seeking to expand its already large portfolio of intellectual property, and Kadokawa can help drive this goal with its extensive library of manga, anime, movies, and game content. Sony's stock price retraced its gains on Tuesday, while Kadokawa's stock surged to the daily limit after the report was released. A Sony spokesperson declined to comment. Both companies are major shareholders of FromSoftware, the developer of "Elden Ring," along with TENCENT. Sony already owns a 2% stake in Kadokawa Corporation and shares in Kadokawa's subsidiary, FromSoftware. This fantasy work was co-created by veteran game director Hidetaka Miyazaki and "Game of Thrones" author George R. R. Martin. Kadokawa Corporation also released a manga series based on this popular role-playing game this year. Amir Anvarzadeh of Asymmetric Advisors stated, "There is no doubt that Sony wants to acquire FromSoftware, which has always been the jewel in Kadokawa's crown. This is a high-quality game studio, and I have always believed it should be acquired by another third party." Following news of Sony's interest in acquiring Kadokawa, game publisher Bandai Namco Holdings Inc.'s stock price plummeted by 8.7%. Bandai Namco Holdings is responsible for overseas sales and marketing of "Elden Ring." Anvarzadeh said, "If Sony acquires Kadokawa, they won't need Bandai Namco anymore." Founded as a publisher in 1945, Kadokawa has expanded its licensing rights to games, anime, events, and characters such as "Re:Zero." Its market value was approximately $2.7 billion before the report. Having evolved from an electronic product manufacturer, Sony has transformed into an entertainment and technology giant, with businesses spanning movies, music, games, and chips. Anime is a focus for Sony, as the popularity of streaming services and a deep understanding of Japanese culture have propelled Sony's growth globally. Sony CEO Kenichiro Yoshida stated last year, "Cute characters and intellectual property can exist for 30 years, 50 years, or even 100 years." "This is the sustainable growth area we want to invest in." With a market valuation of approximately $114 billion, Sony abandoned its $10 billion merger with its Indian subsidiary and Zee Entertainment Enterprises in January.