Namco proposes merger with Sega

Namco Ltd. has proposed merging with Sega to create Japan's largest video game maker, Namco said last Thursday.

The offer comes just over two months after Sega announced an agreement to merge with Sammy Corp., which also makes computer games but counts as its main business making machines for the Japanese game of pachinko, a game similar to pinball. Sammy and Sega are working towards a completion date of Oct. 1 this year.

Shareholders of those two companies gave the merger plan a cool response and Sega's shares have yet to recover from the dip they suffered after the February announcement. That reaction made Sega one of Japan's most eligible companies for takeover and a string of reports in the local media have placed companies including Electronic Arts Inc. and Microsoft Corp. as possible suitors.

Namco's proposal renews advances made by the company towards Sega that resulted in unsuccessful merger talks that ended last year, Namco said in its statement.

The merger talk follows a period of fast expansion for the video gaming industry. The launch of Sony Computer Entertainment Inc.'s (SCEI) PlayStation console in the mid-nineties opened up video gaming to a much broader audience and led to a shake-up that eventually caused Sega to dump its console business on competition from SCEI, long-time rival Nintendo Co. Ltd. and new entrant Microsoft.

In February shareholders of video-game makers Enix Corp. and Square Co. Ltd. approved a merger between the companies that created Square Enix Co. Ltd. on April 1.

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