Kotaku reports that the Tecmo board of directors has rejected Square Enix's proposed takeover. A statement issued by Tecmo noted that the company "collected opinions from management and game creators as well as a wide range of employees" and arrived at the conclusion to decline the offer.

However, Tecmo has announced it is in talks with Japanese video game creator Koei regarding a potential merger.

A translated statement released by Tecmo reads: "As the game industry environment changes with high-powered hardware, portable game machines and rapid growth as well as online mobile games, the accelerating consumer needs are varied and sophisticated. The industry has intensified. Multi-platform and the importance of overseas markets is pushing the industry towards global competition.

"...Under these circumstances, these two companies have excellent financial positions, strengths and the ability to take advantage of each other in order to improve profitability and solidified the foundation of a worldwide leader."

Tecmo properties including Ninja Gaiden and Dead or Alive have been strong performers in Western video game markets, while Koei's Dynasty Warriors and other like titles have achieved great success in Japan.