Troubled Japanese publisher Tecmo has rejected last week's takeover offer from Square Enix, and is now in talks with Koei over a possible merger, according to Reuters.
The original offer from Square was billed as a friendly bid, and the company said then that if it was rejected it wouldn't attempt a hostile takeover, meaning that a follow-up from Square now looks unlikely.
Meanwhile Tecmo's reasoning for rejecting the offer was based around the belief that it can still grow as a company with a merger.
"Through a merger, we expect we can grow further by respecting both companies' identities and having an environment in which employees can fully exhibit their skills," said Tecmo and Koei in a statement, pointing to a choice for Tecmo which "has a higher possibility of improving corporate value."
Tecmo's share price jumped 7.5 per cent as a result of the news, echoing the jump following Square's bid last week and helping to counter a general downward trend following the resignation of company president Yoshimi Yasuda two weeks ago over Itagaki-gate.
Square has originally planned to buy half of Tecmo's shares for around USD 100 million, saying: "The game industry in Japan is standing at a critical juncture whether it continues to be a center of the video game industry in the world, or not.
"Tecmo is a group of excellent creators with proven track-record in the global market, which is a precious human resource of Japan.
"We, however, cannot be optimistic about the future of this significant resource, given the current circumstances surrounding Tecmo... We believe that Tecmo will be able to make a great leap forward by joining the Square Enix Group."