Electronic Arts goes from strength to strength as the one outstanding games company in the US and this week snapped up two more of its smaller rivals, BioWare and Pandemic studios, part of VG Holding Corp, from private equity group Elevation Partners.
The purchase price was $620 million, despite the fact that Elevation bought the two companies and put them together into VG Holding Corp just 2 years ago for around $300 million.
EA will also issue up to an additional $155 million in equity to employees based on the performance of the two companies over time and has also agreed to lend VG Holding up to $35 million through the closing of the deal.
Elevation Partners is best known for U2 singer Bono’s involvement, but also one of the other partners, Roger McNamee was an early investor in EA.
Elevation also bid for the UK games publisher Eidos a year or so before the BioWare and Pandemic deals, but was outbid at the last minute by Sci Entertainment Group.
This moves EA into action, adventure and role-playing games where the two studios are known to be leaders. The two have ten franchises under development, including six wholly owned games.
BioWare is currently developing Mass Effect, which will be published by Microsoft in November, and is in the early development stages of a massively multiplayer online game. Pandemic Studios is working on Mercenaries 2: World in Flames and Saboteur, in addition to several unannounced projects.
Pandemic and BioWare employ around 800 people across four studios located in Edmonton, Canada; Los Angeles; Austin; and Brisbane, Australia.
EA as a company is valued on the stock market at over $18 billion, and is shooting for revenues of 3.2 billion this year, but made a loss last quarter and still expects to make one next quarter.
The acquisition is expected to close in January 2008 and will be dilutive to EA’s fiscal 2008 results by about $0.30 to $0.40 due to non-recurring acquisition-related charges and stock-based compensation.