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I can see why it could happen: They are both large game developers for the arcades and home consoles in Japan and worldwide. Namco are doing better in some areas of the market in Japan then Sega so it would help Sega if they merged. Likewise Sega have a strong international presence so it would help Namco if they merged.
Apparently here Namco confirm it: http://www.namco.co.jp/home/pr/20030417/ but it's in Japanese, so I wouldn't know.
http://www.reuters.com/financeNewsArticle.jhtml?
http://news.bbc.co.uk/1/hi/business/2956033.stm
Nothing to get excited about really, could go so many ways there isn't even any point in speculating whether they merge/what'll happen if they merge.
Like monkey ball, but with hardass guys.
That sucks
Why do I get the feeling that Sega will stop them releasing games like Soul Calibre on the GC, and force them to make baby games instead.
> Altavista babelfish thingy.
Kidding right? I thought the only 'babel'ing was being done by you as you made it up :)