This development follows a recent Reuters report suggesting that Sony was engaged in discussions to acquire the company responsible for the critically acclaimed fantasy game "Elden Ring." The aforementioned report resulted in a substantial increase in Kadokawa's stock value.
On Wednesday, Kadokawa's shares, which include ownership of "Elden Ring" developer FromSoftware, rose by 16% in Tokyo, following a 23% increase on Tuesday after the initial report.
In a statement released after the market closed on Wednesday, Kadokawa confirmed the receipt of an initial letter of intent for the acquisition but noted that no final decision has been reached yet.
Sony's stock also saw a rise of 2.8% on Wednesday, although the company has refrained from commenting on the ongoing discussions.
Sources familiar with the situation informed Reuters that negotiations are still in progress, and if they proceed successfully, a formal agreement could be finalized in the coming weeks.
This potential acquisition would enhance Sony's entertainment portfolio, which includes games, films, music, and anime.
"Anime and manga are gaining global popularity, and Sony is aware of this trend," remarked Serkan Toto, founder of the Kantan Games consultancy.
"They require additional resources to establish themselves as a major player in these sectors, which is why they are pursuing Kadokawa," he added.
Sony already owns the anime streaming service Crunchyroll and Aniplex, a company known for producing high-quality series like "Demon Slayer."
"Integrating Kadokawa's anime planning and production capabilities would significantly enhance Aniplex's offerings," noted Jefferies analyst Atul Goyal in a recent report.