After the failure of Sega and Sammy to merge, attention turned to rumours that Namco would take Sammy's place as suitor. Now, however, it appears as though that particular relationship has soured as well. Merger talks have broken off this morning, after Sega demurred when asked for a specific answer by Namco to the proposal it had tabled earlier.

"Sega told us on Thursday that it was not in a situation to give a specific answer to the proposal," Namco stated in a press release. "We decided that it is not the right time to proceed with the merger discussions."

While this language leaves the door open to possible future talks, it appears that for the time being, things have cooled off between the two companies. Still, it seems likely that Sega will continue to pursue business opportunities elsewhere, as several prominent names in the videogame industry, including Microsoft, have been linked in connection with the company.