Holishit!  This is like the one really good answer in this thread.

Cing! ;_;

Drill Dozer rocked ass!  You take that back!

Nintendo already owns Game Freak anyway...

Microsoft: Epic Games
Sony: Square Enix (or Level 5)
Wii: Bring Rare back!

Okay, I'm going to try for some serious answers (ie: not something ridiculous like Level-5, Epic Games, Square Enix, Capcom, Sega, Rockstar, etc).

Nintendo buys Next Level Games.  They've had multiple close successful partnerships, the last of which was even a hugely acclaimed classic IP revival (Punch-Out!).  Not many companies can do that, NLG doesn't come with much overhead/baggage and it'd help strengthen Nintendo's flagging western R&D.  Seems like a good match from every angle imo.

Sony buys Q? Entertainment.  Y'know, when Miziguchi originally stormed out of Sega rather than work under Sonic Team (and took half of UGA with him) I always figured he'd have gone to SCE.  It really just seems like the sort of place that'd fully support his design sensibilities and he could make a team like UGA flourish.  There's just a similar feeling there, games like REZ or Space Channel 5 were totally games I could see coming out of SCE Japan Studio (Kaz even complimented REZ publicly, and that was back when Sega was the competition).  Plus if Q? went to SCE, they could concentrate fully on doing trippy shooter/puzzle/rhythm hybrids and not have to waste time on Bandai fighters or Disney adaptation to stay afloat.

Microsoft buys Bluside.  This one might be more controversial, as Bluside has a pretty strong PC presence and Micrsoft seems eager to kill PC gaming dead asap, but I still think it'd be a good match.  Microsoft clearly loves Kingdom Under Fire, they really do need more of an eastern R&D presence, and Bluside loves money.  If Microsoft can drive Korea as real center for consoles with better home grown content, then all the better too.

Sony buying Level 5 and Microsoft buying Epic Games is totally possible. Especially Epic Games.

No, neither really is.  Mainly because L5 and Epic wouldn't want to, L5 moreso I'd imagine given their DQ partnership and HUGE DS success.  Sony's never really done anything for them by comparison, why would they settle for 3rd best?

Epic at most I can see maybe selling off their game business to MS if the price is right (ie: vastly more than it's actually worth), but they make way, way too much on UE to flush that business down the drain.  Everyone saw what happened to Renderware after EA bought Criterion, it'd be the same thing all over.

The question though is is Epic's Unreal Engine worth going to multiplat PS3 games, which is pretty much the only non-Microsoft application for them (aside from iPhone which is minimal, and Nintendo can piss right off as far as Epic is concerned apparently)

Nintendo should buy out Game Arts. I think they would fit well

I don't think it matters, it just wouldn't get the same support from licensees.  I guess Microsoft could see worth leveraging it as part of their DX/XNA toolset or something, but that seems like kind of a waste.

And I'd agree with Game Arts, but Gung Ho already bought them out awhile ago.

microsoft:IW or the makers of bayonetta i cant remember their name :(!!!!!!
sony:square
nintendo:rare

sony: quantic dream or kojima productions