EA Buys a Chunk of Ubisoft
From ARSTechnica:
Electronic Arts buys a big chunk of Ubisoft
12/20/2004 3:44:20 PM, by Eric Bangeman
A week after locking up the exclusive rights to the NFL, Electronics Arts may be looking to make another acquisition. The gaming behemoth has snapped up nearly 20 percent of the French game firm Ubisoft in an acquisition that set them back anywhere from US$85 million to US$100 million. The stock purchase gives EA 18.4 percent of the voting shares, against the 22.8 percent controlled by Ubisoft's founders, the Guillemot family.
Ubisoft is the third-largest game publisher and is responsible for titles such as Far Cry, the Prince of Persia titles, Tom Clancy titles, and Myst. In addition to its headquarters in France, Ubisoft has development studios in the US, Canada, and China. They are not excited about the acquistion and are not welcoming EA with open arms.
"Pending further information, we consider this operation as hostile," an Ubisoft spokesman told Reuters agency.
"We think this operation is aimed at securing the studios of Ubisoft that are ready to face the next generation of gaming consoles," he added.
For its part, EA noted that the purchase does not give it any say in day-to-day operations or overall strategy of the company. However, the purchase may be the beachhead in an attempt to acquire Ubisoft and its lucrative stable of titles. With a market cap of US$18 billion and US$2.5 billion in cash reserves, acquiring a company of Ubisoft's size (US$402 million market cap) is not problematic for EA. Before being finalized, the purchase must get clearance from the US Department of Justice, because of antitrust concerns, and any additional stock purchases would also be scrutinized by the DOJ.
The bigger question is what EA's master plan is. With their bankroll, further acquisitions and exclusive licensing agreements are all too likely. The move to lock up the NFL for five years was greeted with widespread anger, and the lack of competition and likely rise in prices for NFL titles during the term of the agreement do not bode well for consumers. Perhaps EA's recent activities will cause the DOJ and European Commission to begin keeping an eye on them.
