Koei, the larger company, will hold three quarters of the newly combined publisher, according to Reuters. 20 billion yen ($207 million) in stock will be infused into the holding company at its launch.
Tecmo Koei has put forth a business plan aiming for a profit of 16 billion yen ($164 million) in its fiscal year 2011. Last year, the two added up to a combined profit of 8.5 billion yen ($87 million) each company's fiscal year 2007.
The move was actually started by Japanese publishing giant Square Enix, which made a "friendly" buyout offer to Tecmo in August after the publisher hit a rough patch between employee lawsuits and the departures of president Yoshimi Yasudami and famed designer Tomonobu Itagaki.
Tecmo, to the surprise of many, rejected Square's offer and instead entered talks with the Dynasty Warriors publisher. Koei also found itself in difficult times as the company struggled to transition out of developing PlayStation 2 games.