Friday, December 09, 2005

EA Buys Jamdat

Big story. ERTS buys JMDT for $680 million.

From M:Metrics via MocoNews:
  • Jamdat's titles occupy the most premium "“deck placement"” or real estate on the browsers of the major U.S. carriers. MForma follows Jamdat in the number-two slot.
  • The most heavily-promoted Jamdat titles include: Bejeweled, Jamdat Mahjong, Jamdat Solitaire Deluxe, Tetris, DOOM RPG, MLB Baseball 2005 by Jamdat and SOCOM: US Navy Seals.

From the ERTS 8-K:

"Pursuant to the terms of the Merger Agreement and subject to the conditions thereof, each issued and outstanding share of JAMDAT's common stock, other than shares owned by any stockholders who are entitled to and who properly exercise dissenters' rights under the Delaware General Corporation Law, will be cancelled and converted automatically into the right to receive $27.00 in cash, without interest. In addition, Electronic Arts will assume JAMDAT's stock options which are outstanding immediately prior to the effective time of the Merger. Each option will be converted into an option to purchase a number of shares of Electronic Arts common stock equal to $27.00 divided by the average closing sale price of one share of Electronic Arts common stock for the five most recent trading days preceding the closing date of the Merger as quoted on the NASDAQ Stock Market. This transaction will be taxable to JAMDAT shareholders."

From MocoNews, highlights of the conference call (4.8mb 25min):

"In the conference call EA Chairman and Chief Executive Officer Larry Probst was asked why EA decided to buy into mobile content rather than build their own. His reply: "Obviously this is a build or buy decision, we have very carefully examined this space over a couple of months, and we're impressed with Jamdats job in North America, its a clear market leader in that geography… We could be build it over time but over that period of time Jamdat is not going to stand still and wait for us to catch up… We like to be the market leader and this allows us to do that quickly."
  • Mobile games are a big deal..this is north of $1 billion globally and will reach $5 billion in the next few years.
  • Trend towards mobility is undeniable. And it is affordable as well, compared to the $300 consoles
  • We love the Jamdat team…Mitch will lead our combined team.
  • Jamdat has proprietary expertise..will allow us to scale globally
  • Expands our carrier relationships

Among the interesting things to watch unfold will be whether or not the Jamdat brand gets swallowed up thus avioding current tradmark issue with Jamster. Either way it seems like this will mean more focus on the mobile game sector in 2006. ERTS has already said that Holiday sales would only be up 3% to 10% from last year. As of this morning: Shares of Jamdat were up $4.23 to $27 in after-hours trading, while shares of Electronic Arts fell $1.51, or 2.7%, to $54.24.

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