Tomy and Takara today confirmed that they have entered negotiations that could lead to a business tie-up. Earlier today Japanese publications had reported that the two companies had already agreed to go ahead with a merger, however those reports were quickly refuted by both companies. While negotiations have been confirmed to take place, a concrete agreement has yet to be reached. Should the merger go ahead it would create Japan's leading toy maker, with annual sales exceeding 180 billion yen ($1.70 billion US).

It would also be a sign of the continued consolidation taking place in the Japanese game industry. Takara is the parent company of Atlus. Takara's largest share holder used to be Konami, but Japan's leading third party publisher announced on April 25th that it had sold its 22.2% stake in the toy maker.

• GameWatch