If the merger was to take place it would make the company the largest in Japan with expected sales of 350 billion yen. But shareholders are cautious, like they were with Sega's merger with Sammy.

The possible merger is set for sometime in 2004 and make the company very rich. 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.

The issue is apparently to be brought up in a board issue of Sega's next Wednesday. Sega's top executives will discuss the merger and talk to Sammy about it as well.

Update:
Well it seems that Namco's official website has confirmed their desire to merge. Their site can be found here.