Electronic Arts buys Jamdat

World's biggest publisher jump-starts its mobile business by acquiring wireless game maker for $680 million.


It's never been called Lasky's folly, but it could have been. In 2000, Jamdat Mobile founder Mitch Lasky ditched a cush job in Activision's executive suite for the unknown waters of mobile gaming. He started a company called Jamdat, which came out of the gate with a massive hit, the relatively archaic Snake.

Five year's later, after developing and publishing scores of mobile games, going public, and making a number of significant acquisitions to boot, Lasky and Jamdat's investors have scored big.

The company today announced it has been acquired by Electronic Arts, itself a player in the mobile space, but one that never seemed to get a mobile business model in high gear. After today, not only is EA in high gear, but it owns most of the significant turf it was unable to exploit on its own.

The merger agreement calls for EA to pay $27 cash per share and also assume outstanding stock options for a total of about $680 million, according to EA.

Industry analyst Michael Pachter of Wedbush Morgan Securities said the deal made sense for both parties. "The only company that makes sense to buy Jamdat is EA, because of scale."

According to Pachter, the move quickly makes EA a player in the space. "They don't have to reinvent wireless, and they bought Jamdat for a fair price if they intend to get big."

Jamdat also comes out having accelerated its own strategy. "Jamdat is starved for content, paying too much to others, so it's complimentary that the guy with content buys the guy with know-how," Pachter said.

In a statement, EA CEO Larry Probst said of the merger: "This is an important strategic acquisition for Electronic Arts. Together we intend to build a leading global position in the rapidly growing business of providing games on mobile phones. We look forward to the Jamdat team joining EA."

The acquisition is expected to close in EA's fiscal fourth quarter, with Jamdat founder Lasky taking the reins of the new, suddenly bolstered mobile business for Electronic Arts.

Just yesterday, a Screen Digest report outlined the tremendous growth of mobile gaming in the last year. It cited Jamdat as a dominant player in the North American market and referenced the general failure of traditional gaming publishers to establish themselves in the mobile sector.

EA closed down 84 cents to $55.75 on the Nasdaq today. In after-hours trading following the news, EA shares fell further to to $55. Jamdat shares were higher on the news, rising $1.57, or 6.9 percent, in after-hours trading.

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