Nintendo is set to buy back as much as 7.4-percent of its shares from the family of Hiroshi Yamauchi, the company’s third president (out of four) and the grandson of founder Fusajiro Yamauchi. The share buyback has an estimated value of roughly $1.1 billion, though Bloomberg notes that it’s not clear how much Nintendo intends to purchase. Yamauchi’s heirs reportedly have a “desire to sell.”
The buyback deal, which is set to go through on February 4, is the latest development in Nintendo’s ongoing effort to stop the bleeding after a dismal financial performance in 2013. The company’s financial forecast for the coming year points to sizable losses as consumers continue to ignore the Wii U. Current president and CEO Satoru Iwata faced investors last week in order to lay out a rough plan for survival, one that includes more aggressive outreach & messaging in the mobile space, and possible new directions for the company’s business.
Consolidating ownership under the company’s banner also makes it easier for Nintendo to entertain the possibility of aligning its future with another company. As Iwata himself said in an interview with the Japanese paper Nikkei following the investor address, “We should abandon old assumptions about our businesses. We are considering [mergers and acquisitions] as an option. For this reason, we’ll step up share buybacks.”
It’s not clear if this share buyback is motivated by internal conversations about an existing merger opportunity, or if it’s just a preparatory move designed to ease the process when such an opportunity presents itself. Either way, tomorrow’s sale is poised to inform what could be a pivotal moment for the company during what appears to be an important transitional year.