Nintendo denies Sega bid

Nintendo denies it is buying Sega

Electronic games maker Nintendo has denied a report that it plans to make a $2bn bid for debt-ridden rival Sega.

But the belief that a link-up between the firms may yet take place sent Dreamcast-maker Sega's ailing share price 10% higher.

The prospect was not seen as such a good deal for Nintendo, which slipped more than 5% as investors worried it might become over burdened with its competitor's debts.

The possible takeover was reported in the New York Times on Wednesday, but then dismissed by a Nintendo official as "completely false".

Sony's Playstation fights Sega's Dreamcast

The newspaper said that talks had been ongoing for several months, and also hinted that Sega had been in negotiations with Microsoft, which aims to launch its games console, called X-box, next year.

Sega has failed to break-even for the past four years, forecasting a loss of about $200m for the financial year ending next March.

The slump in profits from the maker of the former cash-puller, Sonic the Hedgehog, is attributed to fierce domestic and international competition, most notably from Sony's hugely successful Playstation consoles.

Sega was forced to cut the price of its newly launched Dreamcast video game systems when sales failed to live up to expectations.

In contrast, Nintendo is on track to reap net profits of 78bn yen ($688m) in the current financial year.