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December 21, 2004

Electronics Arts buys 20% stake in games rival

US video game maker Electronic Arts Inc has acquired a 19.9% stake in French rival UbiSoft Entertainment SA. The move fuels speculation that Electronic Arts might be gearing itself up for takeover bid of the whole company.

By CBR Staff Writer

Electronic Arts purchased the stake, worth around $80 million, through Talpa Beheer BV, the investment arm of Dutch media tycoon John de Mol.

The Redwood City, California-based firm did not disclose the financial terms of the deal, which is still subject to US anti-trust clearance.

UbiSoft is one of the world’s top three video games publishers and employs around 2,350 people. It reported revenue of $619 million in 2004. With over 1,000 titles under its belt and sales split between Europe and North America, UbiSoft is certainly an attractive target say industry analysts.

Analysts at Credit Suisse First Boston see it as a positive financial partnership but one which is also likely to lead to deeper relationship.

Electronic Arts posted revenue of $2.9 billion last year. With a market cap of $18 billion and around $2.5 billion in cash, the company can easily make a swoop for UbiSoft.

Earlier in 2004, UbiSoft’s CEO Yves Guillemot hinted that the company was itself ready to make an acquisition, hinting at a takeover talks of its main European rival Infogames Entertainment SA. The company has also been linked to a battle for control over British rival Eidos Plc, which is up for sale.

The Guillemot family, which founded UbiSoft, owns around 15% of the firm.

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