Electronic Arts Proposes to Acquire Take-Two Interactive Software for $26 Per Share in Cash, or Approximately $2.0 Billion
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"Electronic Arts announced today that it has purchased the holding company that owns BioWare [Mass Effect] and Pandemic Studios [Mercenaries 2]. The acquisition will cost EA about $775 million, which includes a $650 million cash payment to the stockholders of VG Holding Corp., which directly owns the two developers, and an additional $155 million in equity to select VG employees. As part of the agreement, EA said it plans to lend up to $35 million to the company through the closing of the deal, expected in January. EA will also assume outstanding VG Holding Corp. stock options. VG Holding is owned by Elevation Partners, which invested $300 million in BioWare and Pandemic in November 2005, creating one of the world's best-funded and largest independent game development houses."
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"In today's EA investor conference call, CEO John Riccitiello was asked by analysts whether the company's PlayStation 3 development process had caught up with its Xbox 360 development process, an issue that had led to delays at a number of publishers. 'Not quite,' Riccitiello said, adding 'There's no doubt that Electronic Arts, along with many other publishers, had some challenges essentially meeting the technical specifications effectively on the PlayStation 3.' "
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Analysts said Tuesday that video game maker Electronic Arts Inc. is cutting prices on sports games, which the analysts said is a bad sign going into the holiday season. The games affected include important sports titles such as "NBA Live 08," "Madden NFL 08" and "Tiger Woods PGA Tour 08."
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John Riccitiello, CEO of Electronic Arts, challenges software publishers and developers to offer more innovative titles. He says that sequels and rehashes are "boring people to death and making games that are harder and harder to play."
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I'm pleased to announce that EA has made a proposal to acquire Take-Two. We've issued a press release that explains why the deal is attractive for the shareholders of both Take-Two and EA. Now I want to share some perspective on why it would be good for the people who make Take-Two's games and, just as important, the people who play them.
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Stock rose $2.48 in morning trading to $61.17, following yesterday’s announcement that EA would beat its Q2 revenue and earnings guidance.
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Electronic Arts has posted hefty sales of $3.67 billion for its full fiscal year, but net loss for the year was $454 million, down from net income of $76 million a year ago.
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The company reported that 15 of its titles had hit double platinum, selling more than 2 million copies each, a figure that was up from 10 for the 2007 fiscal year.
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Peter Moore has revealed EA's cancellation of Madden '09 on PC, citing "serious business challenges" in releasing sports titles on home computers. The title will still appear on PS3, Xbox 360, Wii, PS2, DS and PSP, leaving PC Madden fans feeling a bit left out. Moore notes that Madden '09 is not the only PC title receiving the axe, and that it represents a larger decision by EA Sports to cut back on their number of PC releases.
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