It's obvious you are biased against Nintendo.
I'm not "biased against Nintendo". I used to be a huge Nintendo fanboy until a series of strategic mistakes showed me that Nintendo is only human, and more than that, they're not my friend. The world doesn't need someone like me cheering for Nintendo to be handed the chance to rule that they have repeatedly been unfairly denied. I still enjoy Nintendo games though, and I find some of Nintendo's mistakes strategically fascinating.
If Nintendo wanted to increase the output through M&A they could have bought other studios other than Rare.
That's not true. Iwata has said so himself, during some of the many times Nintendo experienced game shortages. Nintendo can't just throw around it's large reserves of money and buy developers, because those developers could flee, leaving Nintendo with an empty shell. How many studios out there had a good fit with Nintendo's audience, and a good relationship with Nintendo, and were willing to be purchased? Not many. And when the most obvious one was standing on Nintendo's doorstep asking for exactly that, Nintendo turned them away.
You fail to argument why Nintendo should have spent at least $100M to acquire the remaining 51% of Rare stocks ($100M is what allegedly Nintendo received from the sales so it's fair to assume that's roughly what Stamper brothers asked to Nintendo).
To give a point of reference Nintendo bought Retro Studios for $1M, 80% of Monolith Soft for $630K.
For Nintendo to consider it would be a worthy investement spending a huge sum like $100M, Nintendo should have:
1) believed only Rare could have managed a key franchise like Donkey Kong.
2) believed in Rare's IPs (mainly Banjo-Kazooie and Perfect Dark the rest didn't sell that well or were out of fashion) prolonged success.
3) believed in Rare ability to create new hits.
And that all the three points were worth $100M + the money needed to run the company monthly.
I have already my own answers for the above points.
The $1 million Nintendo paid for Retro Studios was reportedly a "token amount" after Nintendo had sunk a large amount of money into the disastrous startup, and they needed to sink a lot more in to whip the company into shape, and the company literally would've collapsed without Nintendo's direct intervention. Nintendo could have purchased Retro for the token amount of one dollar, but at that point Jeff Spangenberg could've refused to sell and simply allowed the company to die. One million dollars was what Nintendo decided it took to politely ask Spangenberg to admit defeat and step out of the way and allow Nintendo to take the reins. It's not an indication that all you need to do to purchase your own Metroid Prime-caliber development studio is have one million dollars.
The Monolith deal was mixed up with a failed attempt at Nintendo casually purchasing Bandai (who it turned out, did not wish to be purchased by Nintendo).
Fact is, The Stampers offered Rare up to Nintendo for a fair market value, and then when Nintendo declined, Microsoft bid up the price because
they saw the importance of Rare to Nintendo they didn't want Nintendo to realize their mistake and change their minds. I don't know where people get the idea that Rare was somehow overpriced (sour grapes, I guess). Rare was the right product for Nintendo to purchase, and they were fairly priced.
Nintendo didn't buy Rare because Nintendo is cheap. Money goes into Nintendo, and money rarely goes out of Nintendo. That "financial conservatism" has allowed them to survive many of their massive blunders over the years, but that financial conservatism has also
been the cause of many of their massive blunders over the years.