Sega, which was rumored to be in merger negotiations with Microsoft as far back as last Spring, has flatly denied the story. Nintendo has denied the rumors as well.
Today's Times article, based on leaks from Sega execs, said that Nintendo was in talks to seal a $2 billion acquisition of Sega. Nintendo share prices fell 4% on the acquisition rumors, caused by shareholder worries that Sega's large debt would prove problematic to Nintendo. Sega's shares climbed over 10% on the news.
Hiroshi Yamauchi, President of Nintendo, said in a written statement, "The information reported by some overseas media that our company will buy out Sega is all wrong, and we express with 100% certainty that our company will not buy out Sega."
Sega likewise dismissed the story, saying "The report that Nintendo is in talks with Sega to buy us out is groundless and Sega flatly denies the report."
Whether this is a trial balloon by one or both companies to gauge the reaction of shareholders and the game industry to a merger, an attempt by Sega to kick-start rumored merger negotiations with Microsoft, or just a lot of hot air, may play out over the coming weeks.