Houlihan Lokey Advises Sega Sammy Holdings

Houlihan Lokey is pleased to announce that Sega Sammy Holdings Inc. (TYO:6460; Sega), a leading Japanese game maker, has sold Phoenix Resort Co., Ltd. (Phoenix) to Fortress Investment Group LLC (Fortress), a landmark resort complex in southwestern Japan. The transaction closed on May 31, 2024.

Sega is a diversified entertainment company with a focus on digital games, developing and operating packaged games and amusement facilities, alongside planning, producing, and selling animated films. In its 2021 business plan, Sega outlined a strategic shift towards the entertainment content business with a focus on consumers. To bolster this focus, it acquired Rovio, creator of the popular Angry Birds mobile game, for $690 million.

Phoenix operates a sprawling resort complex in Miyazaki, southwestern Japan, which includes the Sheraton Grande Ocean Resort, Phoenix Country Club (host to the prestigious Dunlop Phoenix Tournament, a major fixture on the Japan Golf Tour), and the Tom Watson Golf Course. Through the collaboration with Sega, Phoenix achieved a remarkable turnaround, securing record sales and operating profits for two consecutive fiscal years from FY2023/3. This successful transformation solidified Phoenix’s position as a leading resort complex in Japan.

Fortress, capitalizing on the proven expertise of its subsidiary Mystays Hotel Management, has been building a diversified hotel portfolio across Japan. This strategic expansion includes the acquisition of approximately 170+ hotels and 27,000+ rooms, highlighting its ability to manage a variety of properties that extend to community-based hotels like the Kampo Inn (acquired in 2021) and established destinations like the historic Hotel New Akao in Atami (acquired in 2022).

Sega made the decision to transfer its shares in Phoenix to Fortress as a strategic partner with a view to further growth. This transaction will allow Fortress to lead the operation and help it achieve its full potential. Sega will continue to hold 20% of the voting rights, ensuring its continued involvement. Fortress will aim to maximize its corporate value and further strengthen its hotel business by managing Phoenix with the Mystays Group.

Houlihan Lokey served as the exclusive sellside advisor to Sega in this landmark real estate transaction, exemplifying the continued success of the Japanese CFR team, its dedicated coverage of the real estate sector, and close relationships with key players in this space.

For detailed information, please read the corporate press release here.

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