Electronic Arts has announced an agreement with Elevation Partners to acquire BioWare and Pandemic parent company VG Holding Corp for $620 million plus an additional $190 million in other charges, bringing the 800 employees of the companies under the EA Games wing.
Pandemic Studios and BioWare Corp. employ roughly 800 people across four studios located in Edmonton, Canada; Los Angeles; Austin; and Brisbane, Australia. The companies 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 currently working on the upcoming Mercenaries 2: World in Flames and Saboteur, in addition to several unannounced projects.
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 Games Label run by Frank Gibeau, President of EA Games.
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.
Elevation Partners was founded by now Electronic Arts CEO John Riccitiello in 2004 after leaving his post as EA president. The company first acquired majority stakes in the developers in November of 2005, when it paid a total of $300 million.
Speaking to Reuters, EA CFO Warren Jenson was quoted as saying, "We're very excited about the revenue potential. We see that in both '09 and '10 to be in excess of $300 million."
EA Games head Frank Gibeau added, "The reason we did this deal is because it's an incredible strategic fit with EA and there is an unbelievable collection of talent from BioWare and Pandemic."
Said Riccitiello, "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. We also expect this will drive long-term value for our shareholders."
