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Electronic Arts To Buy 20% Of Ubisoft
by David Jenkins
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December 20, 2004
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In a surprise move, officials from Electronic Arts have announced that the company is intending to buy around 19.9 percent of French-headquartered publisher Ubisoft. Subject to U.S. anti-trust clearance, the deal is thought to be worth between $85 and $100 million.
As a result of the announcement, shares in Ubisoft skyrocketed by 24 percent, amid speculation that Electronic Arts would subsequently attempt to acquire the entirety of the company.
The current block of shares is to be purchased from Dutch media tycoon John de Mol, and his investment vehicle Talpa Beheer BV.
With a market capitalization of $18 billion, sales of $2.9 billion, and cash in hand of $2.5 billion, Electronic Arts could easily afford to outright purchase Ubisoft, which enjoyed sales of €508 million ($680.1m) last year. However, this latest move appears to signal a U-turn on comments made by CEO Larry Probst in May, where he suggested the company was not seeking any major acquisitions.
It is also the second major purchase in the last week for the company, after the highly expensive and extremely controversial move to secure an exclusive NFL license for its titles.
As one unnamed sector analyst has commented to Reuters: "Electronic Arts is unlikely to stop at the 20 percent threshold. There is an industrial logic behind this move. They must be gearing up for an acquisition."
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