Tecmo and Koei issued a press release today announcing that their boards have taken initial steps towards a possible merger.

The two firms will form an exploratory committee with the hopes of merging their businesses amid stronger competition and greater importance for international markets.

This announcement is, of course, at odds with Square Enix's recent proposal to stage a friendly buyout of Tecmo. Last week, Square Enix outlined a friendly buyout plan that would make Tecmo into a subsidiary. The company gave Tecmo's board until the 4th to respond.

Tecmo did formally reject the Square Enix proposal today. The company says that it consulted a wide range of employees, including management and game creators in deciding to not go with the proposal.