From Gamers.com:
In another surprising turn, Namco has withdrawn its offer to merge with Sega, the Nihon Keizai Shimbun reports today. After Sega was unable to give a specific answer to its offer, Namco has dropped its proposal and Sega has announced that merger talks have concluded.
At the same time, of course, Sega officially announced that it had also broken off its merger negotiations with Sammy. It appears that Sega would have continued to consider Namco’s offer, but Namco, which had asked for an answer by the end of the week, apparently considered that response unsatisfactory.
Namco said that it may consider a merger in the future at Sega’s instigation, but Sega responded that it will not pursue such a course. Thus, it appears that Sega will no longer merge with anyone, at least in the near term. At a press conference announcing Sega’s current course, president Hideki Sato declined to comment on any other potential future deals — including a rumored capital investment by Electronic Arts.
Source: Gamers.com