Atari agrees to Infogrames buyout
The company announced today it had reached a deal to consolidate its American operations by buying the rest of Atari.
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Infogrames, still smarting from the rejection that it suffered at the hands of SCi Entertainment, has some success to celebrate at last. The company announced today that it had agreed to a deal to consolidate its American operations by buying Atari--in which it already had a majority shareholding--outright.
The two companies have been linked for some time; in 2003, Infogrames adopted the Atari name for all of its global commercial operations, having bought a majority shareholding in Atari earlier that same year. Atari restructured its operations in 2007 to focus on publishing and distributing titles in the US, whereas Atari Europe continued with game development and publishing.
The acceptance of the merger was announced yesterday after the US markets closed. The deal will let Infogrames buy all "outstanding equity interests" of its American subsidiary Atari, Inc. at $1.68 a share, giving the deal a total value of approximately $11 million. David Gardner, who became chief executive of Infogrames in January after a stint at Electronic Arts, said, "Bringing Atari US and Infogrames' businesses together will enable us to create a simplified global structure for our business as we seek to rebuild a well-managed, cohesive, and financially disciplined company."
Atari's current management team will stay in place and "remain focused on growing the key North American gaming market." Jim Wilson, president and CEO of Atari, indicated that the deal gave his company a "stronger platform for growth." It also means that Atari will no longer face the threat of being forcibly delisted from the NASDAQ, an issue it faced up to in 2007, and was hit by again in 2008.
As part of the deal, Infogrames is committed to lending Atari $20 million "to cover expected capital requirements," according to the company's statement. Infogrames most recently loaned Atari $5 million as an advance on the royalties from future sales of its Test Drive series, as part of a deal to license the franchise. In 2007, Atari noted in an SEC filing that its total debts raised "substantial doubt about our ability to continue as a going concern."
The deal is still subject to shareholder approval, but it is not expected to be delayed. Atari expects to call a special meeting of shareholders to consider the merger in the third quarter of calendar year 2008.