Forbes is reporting that Bandai and Namco plan to integrate their operations this autumn in order to create the second-largest toy-game business group in Japan. Nihon Keizai Shimbun reported without citing sources.

Their combined annual sales total 458 bln yen, trailing only those of Sega Sammy. The integration plan is expected to be announced today after board meetings this morning. It is said that the motivation behind the merger is to ensure their survival and to intensify competition stemming from Japan's rapidly falling birthrate.

Cube-Europe will have more on the merger as it breaks!

Update:

News has just reached us that both companies have now officially merged. Bandai agreed to buy Namco for about 175.3 billion yen ($1.7 billion) in cash and stock.

''It's positive because they can complement each other's weakness,'' said Ryoji Nagaoka, an equity strategist at SMBC Friend Securities. ''Bandai has abundant characters but is behind in terms of technology. Namco has graphic technology to develop games for game centers but has no outstanding characters apart from Pac-Man.''

The Tokyo-based companies will combine Sept. 29 under the name Namco Bandai Holdings Inc., which will be led by Bandai President Takeo Takasu and Namco Vice Chairman Kyushiro Takagi. Both companies will be hosting a press conference later in the day.