EA confirms talks with Ubisoft, denies buyout is subject

EA officials admit that the two publishers are having "conversations," downplays a <i>Wall Street Journal</i> report saying purchase price and management changes are on the table.

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The plot surrounding Electronic Arts' potential takeover of Ubisoft thickened further today. Citing "people familiar with the matter," The Wall Street Journal is reporting that the two companies have begun discussions about scenarios surrounding the US game giant's purchase of its France-based rival.

"For the moment, the talks are preliminary and running in parallel with other approaches that family-run Ubisoft is making to broker solutions that might shake off the bid from EA," said the Journal, further citing its anonymous sources, "but they could be the starting point of an eventual deal between the two."

According to the Journal, the EA-Ubi discussions have focused on two major points. First and foremost is the issue of what sale price the two companies could agree on. In December 2004, EA bought 19.9 percent of Ubisoft Entertainment European investment firm Talpa Beheer BV for 19.69 euros ($26.54) per share. Currently, the Splinter Cell developer-publisher's stock is trading just below 32 euros ($41.68) a share, and the Journal reports that "Ubisoft's management has hinted it would value the company at up to about 40 euro ($52.10) a share, or close to 1 billion euros ($1.3 billion)" for the entire company.

The other sticky wicket reportedly blocking EA's possible acquisition of Ubisoft is the latter publisher's management, dominated by the Guillemot family. Led by Ubi CEU Yves Guillemot, the Guillemot clan owns 17.5 percent of the publisher and holds 26 percent of the shares eligible to vote on company decisions. The Journal reports that the Guillemots are wary about ceding control of the company they founded nearly 20 years ago and are looking at ways to counter EA's advances. Possible scenarios include "a new injection of capital from existing French shareholders or a merger with Gameloft, a 29%-owned affiliate of Ubisoft run by Michel Guillemot, another family member," said the Journal. The paper also cited an unconfirmed report that Ubi reps had approached the Walt Disney Company for financial backing.

When contacted by the Journal, representatives of EA and Ubisoft would not comment on whether or not the two companies were even talking. However, Electronic Arts vice president of corporate communications Jeff Brown told GameSpot that the two companies were indeed having discussions. "Of course we are speaking with and having the kinds of conversations you'd expect to have with the management of a company... We own 20 percent [of them]," said Brown. However, Brown obliquely denied the substance of the Journal's story. "It would be unwise to characterize any of the discussions as a negotiation," he told GameSpot.

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