Playtonic has denied rumours that Microsoft was set to acquire the studio.
Speculation that the Yooka-Laylee developer was working on a new Banjo-Kazooie game under Microsoft's leadership started doing the rounds on Resetera on Tuesday before being picked up by the games press.
Publishing a statement on Twitter, the studio rebuffed the rumours: "We hate to be the bearers of news that isn't what you want to hear, but we thought it best to come out and say -- we aren't working on a new Banjo-Kazooie game and we remain an independent studio."
The studio pointed out that, while it'd "love to work with the bear and bird again," the "ball isn't in [its] court," hinting at the fact that the Banjo-Kazooie IP belongs to original developer Rare, now owned by Microsoft.
The statement continued: "With that said, we are keen to continue progressing as a studio, carrying the experience of games we worked on, old and new, to create new characters and adventures for you to (hopefully) love."
These rumours around Playtonic are a classic case of the Internet escalating things a bit too much, too quickly.
It started when the studio announced the appointment of former Rare character designer Ed Bryan, who worked on the original Banjo-Kazooie games. Following this announcement, Bryan tweeted a photo of a Microsoft bag with the caption: "Well, I never really had any plans to use this again," before adding later on that the bag had "come out of retirement."
Commenting on this, Playtonic said it first found it "amusing that Ed Bryan's bag [was] being used as serious evidence." But then realised it needed to "set the record straight" as the rumours were spiralling.
Other elements pointing in the direction of a Microsoft acquisition and a new Banjo-Kazooie title included Playtonic registering a new company called Playtonic Games Development Limited and studio director Gavin Price updating his LinkedIn profile to indicate that he was working on three games.
He wrote that one of them was "the one [he] always thought would be game No.1" -- which everyone assumed meant a new Banjo-Kazooie game was in the works.
Microsoft has been on a buying spree recently, acquiring Double Fine Productions back in June, Obsidian and inXile in November 2018 and Ninja Theory, Playground Games, Compulsion Games and Undead Labs at E3 last year.
Playtonic just launched the second entry in its Yooka-Laylee franchise, with The Impossible Lair debuting at No.49 in the EMEAA charts on its launch week despite a strong reception from critics.