Leaders in RPG, Action and Adventure Genres; Ten Franchises in Development - Six Wholly Owned
REDWOOD CITY, Calif.--(BUSINESS WIRE)--Oct. 11, 2007--Electronic
Arts Inc. (NASDAQ:ERTS) today announced an agreement with Elevation
Partners to acquire VG Holding Corp. -- the owner of both BioWare
Corp. and Pandemic Studios. This acquisition gives EA a strong
competitive position in key genres in interactive entertainment:
action, adventure and role-playing games. The two studios have been
recognized for creating some of the highest-quality games in the
industry.
BioWare Corp. and Pandemic Studios 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
redefining open-world games with its upcoming Mercenaries 2: World in
Flames™ and Saboteur™, in addition to several unannounced
projects.
Pandemic Studios and BioWare Corp. employ roughly 800 people
across four studios located in Edmonton, Canada; Los Angeles; Austin;
and Brisbane, Australia.
"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," said John
Riccitiello, EA's Chief Executive Officer. "We also expect this will
drive long-term value for our shareholders."
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.
"Pandemic Studios remains focused on attracting the best talent
and creating blockbuster action games," said Josh Resnick, President
and Co-founder of Pandemic Studios. "As a worldwide publishing leader,
EA represents the ideal partner to bring our titles to market as
global entertainment events."
"We are truly excited by John Riccitiello's new vision for EA,"
said Ray Muzyka, Co-founder and CEO of BioWare Corp. "This vision is
consistent with BioWare's focus on crafting the highest quality
story-driven games in the world. It will enable us to further the
careers of the passionate, creative and hard working teams at BioWare
Edmonton and BioWare Austin."
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.
Transaction and Financial Information
-- The acquisition is subject to customary closing conditions,
including regulatory approvals.
-- The transaction is expected to close in January 2008.
-- On a GAAP basis, the acquisition is expected to be dilutive to
EA's fiscal 2008 results by approximately $0.30 to $0.40 due
to non-recurring acquisition-related charges, stock-based
compensation and amortization of intangible assets. This
amount is a preliminary estimate based on currently-available
information and is subject to change.
-- On a non-GAAP basis, the acquisition is expected to be
dilutive to EA's fiscal 2008 fourth quarter results by
approximately $0.05. This amount is a preliminary estimate
based on currently-available information and is subject to
change.
Acquisition Conference Call
Electronic Arts will host a conference call today at 2:00 pm
Pacific Time / 5:00 pm Eastern Time to discuss the transaction. During
the course of the call, Electronic Arts may also disclose material
developments affecting its business and/or financial performance.
Listeners may access the conference call live through a dial-in number
at (877) 856-1956, access code 220497, or via webcast at
http://investor.ea.com.
A dial-in replay of the conference call will be provided until
October 18, 2007 at (719) 457-0820, access code 220497. A webcast
archive of the conference call will be available for one year at
http://investor.ea.com.
Second Quarter Conference Call
Electronic Arts Inc. will release its results for the second
quarter of fiscal year 2008 after the close of market on Thursday,
November 1, 2007. In conjunction with this release, Electronic Arts
will host a conference call at 2:00 pm Pacific Time / 5:00 pm Eastern
Time to review its results for the second fiscal quarter, discuss its
outlook for the future, and may disclose other material developments
affecting its business and/or financial performance. Listeners may
access the conference call live through a dial-in number at (877)
723-9518, access code 220497, or via webcast at
http://investor.ea.com.
A dial-in replay of the conference call will be provided until
November 8, 2007 at (719) 457-0820, access code 220497. A webcast
archive of the conference call will be available for one year at
http://investor.ea.com.
About Electronic Arts
Electronic Arts Inc. (EA), headquartered in Redwood City,
California, is the world's leading interactive entertainment software
company. Founded in 1982, the company develops, publishes, and
distributes interactive software worldwide for video game systems,
personal computers, cellular handsets and the Internet. Electronic
Arts markets its products under four brand names: EA SPORTS™,
EA™, EA SPORTS BIG™ and POGO™. In fiscal 2007, EA posted
revenue of $3.09 billion and had 24 titles that sold more than one
million copies. EA's homepage and online game site is www.ea.com. More
information about EA's products and full text of press releases can be
found on the Internet at http://info.ea.com.
EA, EA SPORTS, EA SPORTS BIG and POGO are trademarks or registered
trademarks of Electronic Arts Inc. in the U.S. and/or other countries.
™, ®, and Nintendo DS are trademarks of Nintendo.
About Pandemic Studios
With a long series of top-selling, critically acclaimed game
releases, Pandemic Studios is a premier developer of console and PC
entertainment. Over its nine year history, Pandemic Studios has
established a reputation for producing award-winning, cutting-edge
original content and enhancing the value of existing intellectual
properties. Recent hits include sales-record setters Star Wars
Battlefront™, Star Wars Battlefront™ II, and three original
Pandemic-created IPs: Mercenaries™, Destroy All Humans™, and
Full Spectrum Warrior™. In addition to the recently released
Destroy All Humans® 2, Pandemic Studios is developing a number of
new, original titles for next-generation platforms including
Mercenaries 2: World in Flames™ and Saboteur™ at its Los Angeles
and Brisbane studio locations. For more information on Pandemic
Studios and its games, please visit www.pandemicstudios.com.
About BioWare
BioWare Corp. is an electronic entertainment company which
develops computer, console, handheld and online video games focused on
rich stories and memorable characters. Since 1995, BioWare has created
some of the world's best-selling titles including the award-winning
Baldur's Gate™ and Neverwinter Nights™ series, as well as the
2003 Game of the Year, Star Wars®: Knights of the Old Republic™.
Original BioWare-created IPs include the 2005 RPG of the Year, Jade
Empire™, with next-generation titles Mass Effect™ and Dragon
Age™ currently in development. Mass Effect will ship to retailers
throughout North America on November 20, 2007. The game has received
more than 50 awards, including the 2007 Game Critics Awards for "Best
Console Game" and "Best RPG" at the Electronic Entertainment Expo.
With studios in Edmonton, Canada, and Austin, Texas, BioWare is also
hard at work on a new title for the Nintendo DS™ based on Sonic the
Hedgehog, as well as several unannounced projects including a
massively multiplayer online game. For more information on BioWare,
visit www.bioware.com.
BioWare, BioWare Corp., Mass Effect, Dragon Age and Jade Empire
are trademarks or registered trademarks owned by BioWare Corp. in the
U.S. and other countries.
All other trademarks and copyrights are the property of their
respective owners. All rights reserved.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Some statements set forth in this press release, including those
regarding EA's proposed acquisition of VG Holding, the creation of
long-term value for EA's shareholders, the expected impact of the
acquisition on EA's and VG Holding's strategic and operational plans,
and the expected impact on EA's financial results, contain
forward-looking statements that are subject to change. Statements
including words such as "anticipate", "believe", "estimate" or
"expect" and statements in the future tense are forward-looking
statements. These forward-looking statements are subject to risks and
uncertainties that could cause actual events or actual future results
to differ materially from the expectations set forth in the
forward-looking statements. Some of the factors which could cause
results to differ materially from the expectations expressed in these
forward-looking statements include the following: the ability to
attract and retain key personnel; the receipt of necessary regulatory
approvals, including under applicable antitrust laws; the possibility
that the transaction will not close or that the closing may be
delayed; the effect of the announcement of the acquisition on EA's and
VG Holding's strategic relationships, operating results and business
generally, including the ability to retain key employees; EA's ability
to successfully integrate VG Holding's operations and employees; the
valuation and amortization of VG Holding's intangible assets; general
economic conditions; consumer spending trends; the seasonal and
cyclical nature of the interactive game segment; timely development
and release of EA's products; competition in the interactive
entertainment industry; EA's ability to manage expenses during fiscal
year 2008; the availability of an adequate supply of video game
hardware units; EA's ability to predict consumer preferences among
competing hardware platforms; EA's ability to secure licenses to
valuable entertainment properties on favorable terms; changes in EA's
effective tax rates; adoption of new accounting regulations and
standards; potential regulation of EA's products in key territories;
developments in the law regarding protection of EA's products;
fluctuations in foreign exchange rates; and other factors described in
EA's SEC filings (including EA's Annual Report on Form 10-K for the
year ended March 31, 2007 and Quarterly Report on Form 10-Q for the
quarter ended June 30, 2007). If any of these risks or uncertainties
materializes, the acquisition may not be consummated, the potential
benefits of the acquisition may not be realized, EA's and/or VG
Holding's operating results and financial performance could suffer,
and actual results could differ materially from the expectations
described in these forward-looking statements. These forward-looking
statements speak only as of the date of this press release. EA assumes
no obligation to update these forward-looking statements.
CONTACT: For Electronic Arts:
Tricia Gugler, 650-628-7327
Director, Investor Relations
tgugler@ea.com
Jeff Brown, 650-628-7922
Vice President, Corporate Communications
jbrown@ea.com
or
For Elevation Partners:
Sard Verbinnen & Co
Paul Kranhold or Ron Low, 415-618-8750
SOURCE: Electronic Arts Inc.