By Kosaku Narioka

Kadokawa shares were indicated sharply lower after Sony Group said it plans to acquire an additional stake in the Japanese publishing house, dashing market hopes for a possible buyout.

Sell orders for Kadokawa shares overwhelmed buy orders on Friday in Tokyo even at their limit down of 3,689 yen, or 16% lower than the previous day's close. No shares changed hands. Sony shares were recently 2.9% higher at Y3,355.

Sony said after Thursday's market close that it signed a strategic tie-up agreement with Kadokawa and planned to buy 12.1 million new Kadokawa shares for about 50 billion yen, equivalent to $317.6 million.

Kadokawa's stock had risen in recent weeks amid speculation of a potential investment by Sony following reports of a possible buyout.

After the acquisition, Sony will become one of Kadokawa's biggest shareholders, with a stake of about 10%, the companies said.

Sony said it didn't plan to acquire additional Kadokawa shares after this investment.

Under the tie-up, the companies will explore initiatives such as making live-action films and television dramas using Kadokawa's intellectual property, jointly producing anime works and expanding the publishing of Kadokawa's games, they said.

Kadokawa's businesses range from publishing books and magazines, to producing videogames, movies and animation to online services.

Earlier this year, Kadokawa became the target of a large-scale cyberattack, leading to share-price declines.

Write to Kosaku Narioka at kosaku.narioka@wsj.com

(END) Dow Jones Newswires

December 19, 2024 20:42 ET (01:42 GMT)

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