Tecmo has been on a roller coaster ride since the abrupt departure of its celebrity designer Tomonobu Itagaki, but it appears the company is ready to emerge from the corkscrews. Financial news service Bloomberg reports today that Tecmo and Dynasty Warriors publisher Koei plan to follow through on talks initiated in September to merge their businesses. Following the business combination in spring 2009, Koei plans to reorganize into a holding company, Bloomberg reports.

Prior to engaging with Koei in merger talks, Tecmo rejected a friendly buyout bid from fellow Japanese development house Square Enix. In making that bid, Square Enix president Yoichi Wada said, "Tecmo is a group of excellent creators with a 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."

As part of today’s announcement, Koei president Kenji Matsubara recognized that a merger between his company and Tecmo still casts uncertainty on the gamemakers’ shared future in the competitive industry landscape. "In the ¥3 trillion ($28 billion) global games market, we have revenue of ¥40 billion, which begs the question of whether we can survive,’’ said Matsubara. "We plan to make the most of this merger and move on to the next step, which may include acquisitions.’’

Few additional details were available concerning the merger. Bloomberg did note that Koei and Tecmo will both undergo a stock swap for shares in the soon-to-be-formed holding company.

By Tom Magrino