Report: Tecmo Plans Koei Merger, Rejects Square Enix

Tecmo has rejected Square Enix’s offer of a friendly takeover, opting to plan a merger with rival Koei instead. The troubled Japanese publisher and developer claims that a merger with Dynasty Warriors publisher Koei stands a better chance of "boosting corporate value," according to a Reuters report. The two companies intend to come up with a detailed merger plan within the next two months or so. Dead or Alive and Ninja Gaiden creator Tecmo has struggled ever since high-profile producer Tomonobu Itagaki and others left the company and filed a lawsuit for unpaid overtime. Shortly thereafter, president Yoshimi Yasuda exited Tecmo. The offer from Square Enix has been valued at the equivalent of up to $206 million, with a deadline set for today. Square Enix has said it will examine the Tecmo and Koei merger plan in order to understand why Tecmo picked Koei over its own offer, possibly a hint that Square Enix will make a second bid. However, Tecmo president Yasuharu Kakihara says the company will not consider any new offer by Square Enix – despite many analysts favoring the Square Enix deal. A merger between Tecmo and Koei would create a company only a third the size of Square Enix. As a result of the news, Tecmo’s share value jumped by 7.5 percent and Koei’s by 0.3 percent on the Tokyo Stock Exchange, while Square Enix’s price fell by 1.9 percent.