Western studio and Nintendo? Haha ... nope.

WayForward would be an infinitely better purchase

Back when Nintendo was at least somewhat in touch with the West... 

Retro Studios is all Howard Lincoln.

Iwata and the successive Nintendo management probably would've ditched Retro if they could have but Nintendo had invested too much into the studio to simply jettison them. If Retro wasn't a start up that Nintendo themselves financed, but was more like an existing studio that they simply had a partnership with (ala Factor 5 or Silicon Knights), I have no doubt Retro would've been kicked to the curb by now too, lol. 

And what motive would they have to 'kick Retro to the curb'?

They need to make a deal with Nintendo, and then release a C.O.P. II to fill the GTA void that Nintendo has on their platforms. Seriously, why didn't Nintendo do anything to get GTA V on the WiiU? Even as a PS3 port, it would have sold well. That or make a Chinatown 2, but I'm sure T2 would preffer mobile over 3DS.

They could be an "official Nintendo third-party developer" (as Shin'en is since 1999), whatever that means.
or "work exclusively with Nintendo" like Next Level Games without being acquired by Nintendo.