Japanese software maker Namco Ltd , known for its "Tekken" fighting games, said on Thursday it wants struggling fellow game maker Sega Corp, creator of "Sonic the Hedgehog," to reopen merger talks.
A deal would torpedo Sega's planned October union with pinball machine maker Sammy Corp, a move widely seen as a takeover of Sega by financially sound Sammy.
Sega said it is studying Namco's proposal but has not set any deadline for a decision.
The move underlines the intense rivalry and difficulty of making profits in Japan's $5 billion a year game software industry, and follows the April 1 merger of two popular videogame makers that created third-ranked Square Enix Co
A Sega-Namco merger would rank fifth in the Japanese market with annual sales of 350 billion yen ($2.9 billion) and market capitalization of $1.74 billion, similar to that of Square Enix.
"We are certain that consolidation of the two companies' operations in every business field would bring about maximum synergy effects," Namco said in a statement.