The move comeas as Foundation 9 looks to focus on bigger studios.
"We had great success launching our studio in PEI with tremendous and much-appreciated support from the provincial and federal agencies," said F9E CEO Jon Goldman. "However, as F9E's growth strategy has evolved, we have recognized the need to focus on larger studios, both our current ones and potential future additions to the company."
One of the Foundation 9 founders, Andrew Ayrem will become CEO and majority stake holder of the new studio, which will be called Other Ocean. F9 won't retain any interest, making the company completely independent.
"It's been a real pleasure being a part of the growth and success of Foundation 9 and it's exciting to bring this experience to a new opportunity," said Ayre. "I'm looking forward to growing game development in Atlantic Canada and further establishing the region as an up-and-coming location where top games are produced."
The studio's most recent effort was the XBLA conversion of Konami's Castlevania: Symphony of the Night.