Following the decline of the Square Enix offer, Tecmo and Koei are now ready to merge.
In a stock deal worth approximately 20 billion yen ($207 million), Koei and Tecmo agreed to merge under a holding company in April 2009. Tecmo will exchange 1 of each of their shares for 0.9 shares in the new company, Tecmo Koei Holdings, while Koei would have a one to one exchange for their current shares.
Both companies agreed to the merger after Tecmo declined the takeover bid from the larger company, Square Enix earlier this year. According to Tecmo, Koei will "give [them] a greater chance of boosting corporate value."
Fierce competition within the gaming market alongside escalating costs for marketing and development have led game companies to seek alliances in order to decrease cost and increase profit.
The companies are projecting that the merger will generate an operating profit of over 16 billion yen by the year ending March 2012 with sales reaching 70 billion yen.