The Merger That Never Was

The two companies, which had announced a tentative merger agreement back in October, have called the wedding off. Both companies' boards of directors "unanimously and mutually agreed to terminate the definitive merger agreement," though they will continue to work together on various marketing and distribution campaigns, the companies announced.

Ron Chaimowitz, president and chief executive officer of GT Interactive, and Stephen M. Race, MicroProse's chief executive officer, said in a statement, "Both managements agreed that the time simply is not right for combining the two businesses." However, "GT Interactive will continue distribution of MicroProse products in certain major mass market chains in the US as well as that of Macintosh versions of MicroProse products, under prior agreements. GT also holds PC budget rights to the MicroProse back catalog."

Chaimowitz said the aborted agreement with MicroProse does not mean a change in GT Interactive's strategy of "the expansion of our publishing business, through increased investment in our internal development studios and acquisitions of new development studios."

MicroProse announced on Friday that expenses and lost momentum attributable to the failed merger attempt would result in a net loss of between US$7 million and $10 million on revenues of $17 to $20 million for its fiscal quarter ending December 28.

Stephen M. Race further stated, "We are already refocusing our business plan into that of an independent company, which requires some rebuilding or retooling in several areas of our operations that were affected by the anticipated merger. Our five product development studios remain intact and we have already begun to revitalize our domestic distribution channels and attract new sales people in the US."

He said, "In essence, the two months spent on determining how to integrate the two companies has resulted in at least a quarter's worth of slippage in our business plan and product release schedule."