NEWS - Friday, October 12, 2007

EA Acquires BioWare/Pandemic

In an agreement with VC firm Elevation Partners, EA will pay Bioware and Pandemic owner VG Holding Corp.’s stockholders up to $620 million in cash, with an additional $155 million in equity to “certain employees” of VG Holding. EA will also assume outstanding VG Holding stock options and will lend the holding company up to $35 million through the closing of the transaction. The total deal amounts to over $800 million. By comparison, when the two studios were merged by Elevation Partners in 2005, the VC firm said the deal was worth somewhere in the $300 million range. "These are two of the most respected studios in the industry and I'm glad to be working with them again. They'll make a strong contribution to our strategic growth initiatives on quality, online gaming and developing new intellectual properties," said John Riccitiello, EA CEO. "We also expect this will drive long-term value for our shareholders." BioWare and Pandemic will join the new EA Games divisions, headed up by unit president Frank Gibeau. "Pandemic Studios remains focused on attracting the best talent and creating blockbuster action games," said Josh Resnick, president and co-founder of Pandemic. "As a worldwide publishing leader, EA represents the ideal partner to bring our titles to market as global entertainment events." EA CFO Warren Jenson told Reuters, "We're very excited about the revenue potential. We see that in both '09 and '10 to be in excess of $300 million." EA said that costs from the acquisition are expected to be dilutive to EA's fiscal 2008 results by approximately $0.30 to $0.40. As EA points out in a statement, the move also puts a nice little library of wholly-owned properties in the megapublisher's stable. Currently, the two studios combined are working on ten franchises, six of which are wholly-owned. BioWare, who considers storytelling in games one of its main strengths, is creating the highly-anticipated Xbox 360 RPG Mass Effect (pictured), and is responsible for the revered Star Wars RPG Knights of the Old Republic. Pandemic is an open-world maverick, having created the Mercenaries franchise, which has an anticipated sequel forthcoming, along with the WWII action title Saboteur. BioWare CEO Ray Muzyka stated, “[The acquisition] will enable us to further the careers of the passionate, creative and hard working teams at BioWare Edmonton and BioWare Austin." Pandemic and BioWare employ around 800 employees across four studios in Edmonton, Los Angeles, Austin and Brisbane, Australia. The deal is expected to close in January 2008.


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