TOKYO--Sega's shares rose 13.7 percent, closing at 1,137 ($10.06) yen today, following yesterday's announcement that the company will merge with Sammy to form a new holdings company, Sega Sammy Holdings. Once operations are combined, Sega and Sammy's combined annual income for the fiscal year of 2005 is expected to be at 501 billion yen ($4.4 billion), making it one of the biggest game companies in Japan.

　　While Sega's shares soared today, analysts are skeptical about the merger. "The focus will be if the key assets of Sega's business, the creators, would be willing to work in this new environment. At the moment, I'd prefer to say that's not the case," said KBC Securities analyst Hiroshi Kamide, in an interview with Reuters. "When they talked about a merger this time last year, it was taken very negatively, and I haven't seen anything in the last year for the market to change their impression of that."

　　Sega and Sammy's merger requires approval from two-thirds of the companies’ shareholders. Given the rise in Sega's share price, it appears the market is looking forward to the merger despite its low stock-swap ratio; each share of Sammy will be swapped for one share of Sega Sammy Holdings, while each share of Sega will be swapped for 0.28 of a share. Whether Sammy's shareholders really want a merger with Sega is questionable, as the company's shares fell 2.31 percent today, closing at 4,230 yen ($37.46).