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Author Topic: EA To Acquire BioWare Corp. and Pandemic Studios  (Read 1300 times)
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BeosBoxBoy
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« on: October 22, 2007, 11:28:50 pm »

Well,  discovered why EA has been concentrating on getting a giant stock-pile of money at the expense of the Sims Community.

What EA says:
Quote
EA To Acquire BioWare Corp. and Pandemic Studios
Leaders in RPG, Action and Adventure Genres; Ten Franchises in Development - Six Wholly Owned

REDWOOD CITY, Calif.--(BUSINESS WIRE)--Oct. 11, 2007--Electronic Arts Inc. (NASDAQ:ERTS) today announced an agreement with Elevation Partners to acquire VG Holding Corp. -- the owner of both BioWare Corp. and Pandemic Studios. This acquisition gives EA a strong competitive position in key genres in interactive entertainment: action, adventure and role-playing games. The two studios have been recognized for creating some of the highest-quality games in the industry.

BioWare Corp. and Pandemic Studios have ten franchises under development, including six wholly owned games. BioWare Corp. is currently developing the highly anticipated 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 redefining open-world games with its upcoming Mercenaries 2: World in Flames(TM) and Saboteur(TM), in addition to several unannounced projects.

Pandemic Studios and BioWare Corp. employ roughly 800 people across four studios located in Edmonton, Canada; Los Angeles; Austin; and Brisbane, Australia.

"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's Chief Executive Officer. "We also expect this will drive long-term value for our shareholders."

Pandemic Studios is led by Andrew Goldman, Josh Resnick and Greg Borrud. BioWare Corp. is jointly led by Greg Zeschuk and Ray Muzyka. These teams will join the EA(TM) Games Label run by Frank Gibeau, President of EA Games.

"Pandemic Studios remains focused on attracting the best talent and creating blockbuster action games," said Josh Resnick, President and Co-founder of Pandemic Studios. "As a worldwide publishing leader, EA represents the ideal partner to bring our titles to market as global entertainment events."

"We are truly excited by John Riccitiello's new vision for EA," said Ray Muzyka, Co-founder and CEO of BioWare Corp. "This vision is consistent with BioWare's focus on crafting the highest quality story-driven games in the world. It will enable us to further the careers of the passionate, creative and hard working teams at BioWare Edmonton and BioWare Austin."

EA will pay up to $620 million in cash to the stockholders of VG Holding Corp. and will issue up to an additional $155 million in equity to certain employees of VG Holding Corp., which will be subject to time-based or performance-based vesting criteria. EA will also assume outstanding VG Holding Corp. stock options. In addition, EA has agreed to lend VG Holding Corp. up to $35 million through the closing of the acquisition.

Transaction and Financial Information

-- The acquisition is subject to customary closing conditions, including regulatory approvals.

-- The transaction is expected to close in January 2008.

-- On a GAAP basis, the acquisition is expected to be dilutive to EA's fiscal 2008 results by approximately $0.30 to $0.40 due to non-recurring acquisition-related charges, stock-based compensation and amortization of intangible assets. This amount is a preliminary estimate based on currently-available information and is subject to change.

-- On a non-GAAP basis, the acquisition is expected to be dilutive to EA's fiscal 2008 fourth quarter results by approximately $0.05. This amount is a preliminary estimate based on currently-available information and is subject to change.

Acquisition Conference Call

Electronic Arts will host a conference call today at 2:00 pm Pacific Time / 5:00 pm Eastern Time to discuss the transaction. During the course of the call, Electronic Arts may also disclose material developments affecting its business and/or financial performance. Listeners may access the conference call live through a dial-in number at (877) 856-1956, access code 220497, or via webcast at http://investor.ea.com.

A dial-in replay of the conference call will be provided until October 18, 2007 at (719) 457-0820, access code 220497. A webcast archive of the conference call will be available for one year at http://investor.ea.com.

Second Quarter Conference Call

Electronic Arts Inc. will release its results for the second quarter of fiscal year 2008 after the close of market on Thursday, November 1, 2007. In conjunction with this release, Electronic Arts will host a conference call at 2:00 pm Pacific Time / 5:00 pm Eastern Time to review its results for the second fiscal quarter, discuss its outlook for the future, and may disclose other material developments affecting its business and/or financial performance. Listeners may access the conference call live through a dial-in number at (877) 723-9518, access code 220497, or via webcast at http://investor.ea.com.

A dial-in replay of the conference call will be provided until November 8, 2007 at (719) 457-0820, access code 220497. A webcast archive of the conference call will be available for one year at http://investor.ea.com.

About Electronic Arts

Electronic Arts Inc. (EA), headquartered in Redwood City, California, is the world's leading interactive entertainment software company. Founded in 1982, the company develops, publishes, and distributes interactive software worldwide for video game systems, personal computers, cellular handsets and the Internet. Electronic Arts markets its products under four brand names: EA SPORTS(TM), EA(TM), EA SPORTS BIG(TM) and POGO(TM). In fiscal 2007, EA posted revenue of $3.09 billion and had 24 titles that sold more than one million copies. EA's homepage and online game site is http://www.ea.com. More information about EA's products and full text of press releases can be found on the Internet at http://info.ea.com.

EA, EA SPORTS, EA SPORTS BIG and POGO are trademarks or registered trademarks of Electronic Arts Inc. in the U.S. and/or other countries. (TM), (R), and Nintendo DS are trademarks of Nintendo.

About Pandemic Studios

With a long series of top-selling, critically acclaimed game releases, Pandemic Studios is a premier developer of console and PC entertainment. Over its nine year history, Pandemic Studios has established a reputation for producing award-winning, cutting-edge original content and enhancing the value of existing intellectual properties. Recent hits include sales-record setters Star Wars Battlefront(TM), Star Wars Battlefront(TM) II, and three original Pandemic-created IPs: Mercenaries(TM), Destroy All Humans(TM), and Full Spectrum Warrior(TM). In addition to the recently released Destroy All Humans(R) 2, Pandemic Studios is developing a number of new, original titles for next-generation platforms including Mercenaries 2: World in Flames(TM) and Saboteur(TM) at its Los Angeles and Brisbane studio locations. For more information on Pandemic Studios and its games, please visit http://www.pandemicstudios.com.

About BioWare

BioWare Corp. is an electronic entertainment company which develops computer, console, handheld and online video games focused on rich stories and memorable characters. Since 1995, BioWare has created some of the world's best-selling titles including the award-winning Baldur's Gate(TM) and Neverwinter Nights(TM) series, as well as the 2003 Game of the Year, Star Wars(R): Knights of the Old Republic(TM). Original BioWare-created IPs include the 2005 RPG of the Year, Jade Empire(TM), with next-generation titles Mass Effect(TM) and Dragon Age(TM) currently in development. Mass Effect will ship to retailers throughout North America on November 20, 2007. The game has received more than 50 awards, including the 2007 Game Critics Awards for "Best Console Game" and "Best RPG" at the Electronic Entertainment Expo. With studios in Edmonton, Canada, and Austin, Texas, BioWare is also hard at work on a new title for the Nintendo DS(TM) based on Sonic the Hedgehog, as well as several unannounced projects including a massively multiplayer online game. For more information on BioWare, visit http://www.bioware.com.

BioWare, BioWare Corp., Mass Effect, Dragon Age and Jade Empire are trademarks or registered trademarks owned by BioWare Corp. in the U.S. and other countries.

All other trademarks and copyrights are the property of their respective owners. All rights reserved.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

Some statements set forth in this press release, including those regarding EA's proposed acquisition of VG Holding, the creation of long-term value for EA's shareholders, the expected impact of the acquisition on EA's and VG Holding's strategic and operational plans, and the expected impact on EA's financial results, contain forward-looking statements that are subject to change. Statements including words such as "anticipate", "believe", "estimate" or "expect" and statements in the future tense are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. Some of the factors which could cause results to differ materially from the expectations expressed in these forward-looking statements include the following: the ability to attract and retain key personnel; the receipt of necessary regulatory approvals, including under applicable antitrust laws; the possibility that the transaction will not close or that the closing may be delayed; the effect of the announcement of the acquisition on EA's and VG Holding's strategic relationships, operating results and business generally, including the ability to retain key employees; EA's ability to successfully integrate VG Holding's operations and employees; the valuation and amortization of VG Holding's intangible assets; general economic conditions; consumer spending trends; the seasonal and cyclical nature of the interactive game segment; timely development and release of EA's products; competition in the interactive entertainment industry; EA's ability to manage expenses during fiscal year 2008; the availability of an adequate supply of video game hardware units; EA's ability to predict consumer preferences among competing hardware platforms; EA's ability to secure licenses to valuable entertainment properties on favorable terms; changes in EA's effective tax rates; adoption of new accounting regulations and standards; potential regulation of EA's products in key territories; developments in the law regarding protection of EA's products; fluctuations in foreign exchange rates; and other factors described in EA's SEC filings (including EA's Annual Report on Form 10-K for the year ended March 31, 2007 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2007). If any of these risks or uncertainties materializes, the acquisition may not be consummated, the potential benefits of the acquisition may not be realized, EA's and/or VG Holding's operating results and financial performance could suffer, and actual results could differ materially from the expectations described in these forward-looking statements. These forward-looking statements speak only as of the date of this press release. EA assumes no obligation to update these forward-looking statements.

CONTACT: For Electronic Arts:
Tricia Gugler, 650-628-7327
Director, Investor Relations
tgugler@ea.com
Jeff Brown, 650-628-7922
Vice President, Corporate Communications
jbrown@ea.com
or
For Elevation Partners:
Sard Verbinnen & Co
Paul Kranhold or Ron Low, 415-618-8750

SOURCE: Electronic Arts Inc.

Original position on the Internet: http://investor.ea.com/phoenix.zhtml?c=88189&p=irol-newsArticle&ID=1061844


What CNET says:
Quote
Electronic Arts pays $860 million for BioWare, Pandemic Studios
Posted by Caroline McCarthy
This story has been updated from its original version.

In order to get back on top of the video games market, Electronic Arts is willing to pay a hefty price. Namely, $860 million.

The Redwood City, Calif.-based publisher announced on Thursday afternoon that it had agreed to acquire VG Holdings, the parent company of two game development companies, BioWare and Pandemic Studios, from private equity firm Elevation Partners.

This deal, expected to close in January and originally reported by the Wall Street Journal, is the largest in EA's 25-year history.

For more coverage from CNET News.com's sister site Gamespot, click here.

Among BioWare's already-released titles are the Baldur's Gate and Neverwinter Nights series as well as a number of Star Wars titles; Pandemic Studios is also responsible for a handful of Star Wars games in addition to Mercenaries and Destroy All Humans. But of greater interest to EA are the ten upcoming games in the two companies' collective pipeline, including Mercenaries 2 and the hotly anticipated Mass Effect.

"Mass Effect has an enormous amount of buzz right now," said Brian Crecente, editor of gaming blog Kotaku. "Of everything that (EA) is snatching up, it's by far the most important acquisition."

EA is in need of a blockbuster. In July, research firm The NPD Group released figures showing that it had been toppled from its number-one position in video game sales for the first time in over a decade; rival Activision had cruised ahead, fueled by the success of the blockbuster Guitar Hero franchise that it obtained when it purchased publisher Red Octane in 2006. From January through June of this year, the NPD stats showed Activision raking in $397.8 million in sales in comparison to EA's $365.7 million.

"It's all Guitar Hero," Crecente said of Activision's recent winning streak. "I don't think Mass Effect is Guitar Hero, but Mass Effect is in my mind a very, very big title."

"I think this transaction is a big plus for EA," CEO John Riccitiello said in a call with investors and analysts on Thursday. It's also a very intimate deal for Riccitiello, who had left his CEO post at EA in 2004 to become a founding partner in Elevation; he returned to the top spot at the video game publisher this past April.

It didn't take long for Riccitiello to close his first deal with his former partners at Elevation, who include famed Silicon Valley investor Roger McNamee, former Apple CFO Fred Anderson, and Irish troubadour Bono. He's no stranger to Pandemic or Bioware, having been responsible for bringing those two studios into the Elevation fold in 2005. As a result, even though he wasn't involved in the financial negotiations, he's very well versed in the history and potential of what the two studios can bring to EA.

Not only may the deal strengthen EA, but Riccitiello will probably personally benefit from the deal. He remains an investor in the Elevation Partners fund, and could stand to make $4.9 million on the deal following the distribution of the profits to fund shareholders, according to a filing EA made with the Securities and Exchange Commission Thursday. That payout could fall if Elevation doesn't do as well with its investments over the remainder of the year, the filing said.

Bret Pearlman, managing director and co-founder of Elevation, said EA was in a competitive bidding situation for the two studios down to the wire, although he declined to name the other suitors. He also declined to specify how much Elevation invested in VG Holdings over the time it was owned by Elevation.

The deal marks the second high-profile move for Elevation in the last several months. In June the firm closed a unique deal for 25 percent of Palm, which has struggled trying to extend the success of the Treo as other rivals have regrouped.

In this new deal, Elevation is receiving about double what it originally invested in BioWare and Pandemic, which the firm acquired individually under Riccitiello's auspices before merging them into VG Holdings. EA will pay up to $620 million in cash to VG's stockholders, about $155 million in equity to select VG employees, and will assume approximately $50 million worth in VG stock options as well as lend the game company about $35 million.

In the short term, the deal will knock about 30 cents to 40 cents off EA's net profit for the 2008 fiscal year, the company said in a press release. But on the conference call, executives said the deal is expected to add to EA's earnings during its fiscal 2009 year.

Gaming insiders say it's a good move for the company. "EA is acquiring two pretty strong publishers," Crecente said. But gaming fans might think otherwise. "For whatever reason, I guess because EA's a large company, there is an enormous amount of backlash," he observed. "I think the problem is that gamers' biggest fear is that a good franchise will come under the control of a sort of corporation mentality that cares more about money than it does the product. Whether or not that's really true with EA is debatable."

Crecente pointed out EA's famous Madden NFL football title, which it revamps and re-releases every year in order to drive up sales.

EA spokeswoman Tammy Schachter insisted, predictably, that gamers have nothing to worry about with the BioWare/Pandemic Studios acquisition. "Being part of the EA family won't change the creative side of these games," Schachter said. "It will only open up the publishing and distribution opportunity for the games."

But enthusiasts like Crecente say that it's still troubling as a few huge companies control an increasingly bigger share of the games market. "It's like Hollywood in that the more you have this conglomerate sort of mentality. I think it dampens creativity if you only have a couple of publishers out there," he said. "The likelihood of a studio coming up out of nowhere and coming up with a blockbuster, I think, is less possible."

CNET News.com's Tom Krazit contributed to this report.

Original position on the Internet: http://www.news.com/8301-10784_3-9796120-7.html


Now you can at least we know why we have been screwed over so regularly by EA with The Sims 2 franchise.
« Last Edit: October 23, 2007, 04:09:34 am by ~Marvine~ » Logged

"There is a certain elegance in wasting time. Any fool can waste money, but when you waste time you waste what is priceless."
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« Reply #1 on: October 23, 2007, 06:20:23 am »

:doh:  Man, I hate how "the green" makes people so selfish.  Abandon your #1 fan-source by screwing them over with crapped-up and buggy products in order to buy more companies, all just so they can line more cash in their pockets.  I can't say I've played any of the games from those two companies, but from the grapevine I can tell that they are pretty popular and fun.  I feel sorry for when they have to deal with even more major bugs than usual, just like the Sims community... Doggone money-grubbin' bastards... :angry5:

Sometimes, I really hate how the world works... can't trust just about anybody nowdays, because they're so drawn into greed and selfishness they'll pull even the most dissatisfying and unhonorable moves for their own self gain...  :-(
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MaryH
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« Reply #2 on: October 23, 2007, 07:17:55 am »

I wonder what they're going to do with these new purchases? Make more buggy game software? Improve it..no, that would be too intelligent. They're convinced they have the only game in town that's worth the money. Problem is, the more they screw us, the less money they'll get when their base decides it isn't worth the money to get a bad game.
I can the ending of this particular story line-bankruptcy when they run out of money..and the end of the sims franchise as we know it. There are limits to growth-ask Walmart about this.
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abaris
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« Reply #3 on: October 23, 2007, 07:26:26 am »

Quote from: Tenshii~Akari;1002081
:doh:  Man, I hate how "the green" makes people so selfish.  Abandon your #1 fan-source by screwing them over with crapped-up and buggy products in order to buy more companies, all just so they can line more cash in their pockets.


Welcome to the free market. The word fanbase doesn't have any significance there. The word may have had some significance back in the 80ies when small companies were almost able to have some personal relationship with their buyers. But a corporation doesn't give a damn if you're buying or not. As long as there aren't millions of people complaining via the mass media, you're not even a pebble in the big pond.
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« Reply #4 on: October 23, 2007, 08:05:27 am »

^^ Ouch... ain't that the painful truth. :rofl:
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Captain_Shepard
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« Reply #5 on: October 26, 2007, 05:56:10 pm »

I swear that if EA turns BioWare, for me the best rpg maker into bugged garbage I'll murder their staff.
And the only reason I see in EA's buyin them is Mass Effect. They know that it will sell a lot so they're interested on the profit.
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