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Electronic Arts and Ubisoft in Informal Talks

 
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ruby
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Feb 21, 2005, 11:01 PM

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Electronic Arts and Ubisoft in Informal Talks Can't Post
Shares of Ubisoft Entertainment SA rose 4 percent Wednesday as the French video game maker and its U.S. rival said they were in discussions, prompting speculation the French company could be an acquisition target.

Representatives of both companies declined to elaborate on details of the talks.

Electronic Arts, the world's No. 1 video game publisher, bought an almost 20 percent stake in Ubisoft in December. Ubisoft initially said it considered the move as hostile, while Electronic Arts said it was preserving its "strategic options" without ruling out a takeover bid.

The two companies have since softened their tone with each other. Ubisoft officials say they are exploring multiple avenues — from a strategy to fend off a possible hostile takeover to holding discussions with investors, including Electronic Arts.

EA intentions remain unclear. Analysts said its acquisition of Ubisoft shares could be a prelude to a full takeover or simply a defensive step to prevent the smaller rival from falling into competitor's hands.

Electronic Arts, maker of blockbuster games such as "Madden NFL" and "SimCity", has five times the revenue of Ubisoft and expects to reach up to $3.3 billion in sales for its current fiscal year.

Ubisoft's annual revenues have quadrupled in the past five years with the help of titles such as the Tom Clancy "Splinter Cell" series and "Rayman."

Shares of Ubisoft climbed 4 percent to 32.90 euros ($42.84) in Paris trading Wednesday amid a Wall Street Journal report of the preliminary talks. Shares of Electronic Arts rose 72 cents to close at $64.88 on the Nasdaq Stock Market.


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