in 2003. Another project in development at the time was Kingdom Hearts (2002), Nomura's directorial debut. The game was a collaboration between Square and The Walt Disney Company, blending Disney characters with Final Fantasy elements in an original story. Kingdom Hearts was also Shimomura's last project as an in-house composer before she left and went freelance in 2002. A merger with rival company Enix had been under discussion since 2000, but Square's financial losses prompted Enix to halt discussions. Following the commercial success of Final Fantasy X and Kingdom Hearts, talks went ahead on the merger with Enix as Square's finances stabilized; Wada described it as a merger of two companies "at their height". Despite this, some shareholders had doubts about the merger, notably Miyamoto, who would find himself holding significantly less shares and having a smaller controlling stake if the deal went ahead as initially planned. Miyamoto's issue was resolved by altering the exchange ratio to one Square share for 0.81 Enix shares, and the merger was greenlit. The merger resulted in Square Enix being formed on April 1, 2003, with Enix as the surviving corporate entity and Square dissolving its departments and subsidiaries into the new company. Around 80% of Square's staff transitioned into Square Enix. Structure Development structure During reports on the merger with Enix, Takashi Oya of Deutsche Securities described Square as "[doing] everything by itself" compared to Enix's tradition of outsourcing development. During Square's first years, there was no set development structure, with the ten-person staff freely shifting between roles and projects. After the first couple of years, there were two loosely-defined production groups led by Sakaguchi and Tanaka respectively. Following the release of Final Fantasy IV, Sakaguchi divided the production team, assigning different staff members to the Final Fantasy, SaGa and Mana series. A secondary studio was founded in Osaka in 1990, with Final Fantasy Legend III (1991) as their first project. By 1997, the company was divided into seven development divisions, expanded to eight that year with two based in Osaka. In 1998, the old development divisions were restructured into Production Departments, and the Osaka branch was closed down. The system was reshuffled again in 2002 to promote "greater understanding", and allow for reassignment between divisions. Among the heads of divisions at this time were Kitase, Kawazu, Tanaka, Matsuno and Hirata. Following the merger with Enix, the eight divisions were incorporated into the