Japanese publisher Square Enix has announced that it has offered to buy rival Taito in a deal worth around 67 billion Yen (500 million Euro), which would create the third largest game publisher in the Far East.
Although the deal is in the early stages at present, it has already received a major boost from Taito's largest shareholder, Kyocera Corp, which says that it will sell its 36 per cent stake to Square Enix.
The merger would create Japan's third largest games company, after Nintendo and Namco Bandai, with the two companies having combined revenue of 158.5 billion Yen (1.18 billion Euro) in the year ended March 31, 2005.
It would also give Square Enix an avenue into the huge Japanese arcade market, in which Taito enjoys a significant presence. At present, Square Enix - formed by a merger between Square Co and Enix Corp only two years ago - is mostly active in the console role-playing game and mobile phone game spaces.
Shares in Taito rocketed after the announcement of the offer, with its stock up by as much as 14 per cent, while Square Enix' stock was up 3.5 per cent.