PCCW to buy U.S. firm's game arm

Game software developer Pacific Century CyberWorks Japan Co. said Friday it has agreed to buy VR1, the network game software division of U.S. Internet business and entertainment provider Circadence Corp., for about $38 million.

Based in Boulder in Colorado, VR1 has developed technology that enables thousands of people to play a game simultaneously on the Internet.

Tokyo-based PCCW Japan, listed on Japan's over-the-counter market, is seeking to strengthen and expand its business through the purchase, it said.

Under the agreement, PCCW Japan will issue about 5.6 million new shares worth about $38 million to swap with VR1 shares, the company said.

The number of new shares accounts for 5.5 percent of PCCW Japan's outstanding shares.