Nintendo, Sega Strongly Deny Merger Talks

The New York Times reported Wednesday morning on its Web site that Nintendo is in talks to acquire rival Sega.

Quoting executives close to the negotiations, the newspaper said the two companies are holding talks that could lead to Nintendo acquiring Sega for around US$2 billion. Terms of the transaction are still under discussion and the talks, which have been going on for months, could still collapse, said the report.

Both companies vehemently denied the report.

"It is completely false and we would like to say there are no such talks," said Sega spokeswoman Miho Masuda.

Nintendo said in a statement that it was "100 percent not in talks to acquire Sega."

The newspaper reported that Isao Okawa, chairman of Sega, has been looking to sell the company for some time and has even held talks with Microsoft, which is keen to enter the consumer computer games business and is planning its own console, the X-Box. Microsoft announced launch details of the console last week.

Sega has been fighting a fierce battle in the consumer game console business ever since Sony Computer Entertainment entered the market several years ago with its PlayStation console. The company overnight began eating into the market share of Sega and rival Nintendo, which at the time had the market almost to themselves. While Nintendo fought back with its N64 console, Sega has been struggling.

In late November, the company reported a worse than expected operating loss of 32.5 billion yen (US$287.2 million) for the six months to the end of September. The company said price cuts on the Dreamcast console put pressure on earnings.

Sega, in Tokyo, can be contacted at +81-3-5736-7111 or online at http://www.sega.co.jp/ . Nintendo, in Kyoto, can be contacted at +81-75-662-9600 or online at http://www.nintendo.co.jp/.

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