Tecmo and Koei Talk Merger

Japanese game studio Tecmo, publisher of Dead or Alive and Ninja Gaiden, turned heads last week when it turned down a buyout offer from Final Fantasy maker Square Enix only to enter merger talks with publisher Koei.

Now, Tecmo has emerged to publicly respond to failed suitor Square Enix. In a statement translated by Kotaku, Tecmo acknowledged Square's questions which previously had been ignored and added: "To answer Square Enix's proposal within the time frame of one week provided little room for negotiation and discussion."

Tecmo also credited Koei for a better negotiating situation. "Conversely, regarding the proposal from Koei, there is time for management to consider how to integrate and most likely arrive at ultimately raising our corporate value. This is why we have begun talks with Koei concerning corporate integration."

Koei, perhaps best known for its battlefield hack-and-slash Dynasty Warriors series, has found itself in a difficult situation after the peak of the PlayStation 2. In Japan, it's now "very tough for third parties like us to do our business," said Koei president Kenji Matsubara to Gamasutra.

In a more diversified Japanese market, Koei sees itself stretched thin, a problem Matsubara implies may be solved by a merger. "[The market's] in a transition situation ... these days, we have to spend resources on handhelds, popular consoles like the Wii, and high-performance consoles like the Xbox 360 and PS3."