Microsoft in Talks to Buy Game Developer

Microsoft Corp. is in talks to acquire Rare Ltd., a game development studio that is 49% owned by Nintendo Co., according to sources close to the negotiations.

A sale would be a coup for Microsoft, which launched its Xbox game console last year and is aggressively seeking premium titles for the box.

Rare, based in Britain, has developed a reputation as a top-tier developer for Nintendo. The privately owned company developed hit games such as “Donkey Kong Country,” “Goldeneye,” “Perfect Dark” and “Banjo Kazooie.” It also developed “Starfox Adventures,” scheduled for release Sept. 26 for Nintendo’s GameCube console.

Both Nintendo and Microsoft declined to comment.

In 1995, Nintendo purchased a 25% stake in Rare and has increased its stake to 49%. The remainder is owned by brothers Tim and Chris Stamper, who founded the company in the late 1970s.

In recent months, Nintendo has placed an emphasis on attracting older audiences for its games, aligning itself with Japanese developers as Sega Corp., Namco Ltd., Square Soft Inc. and Capcom Co. Ltd.--studios known for developing more mature titles.