Electronic Arts Acquiring Jamdat -- Responses and Analysis (ERTS, JMDT, THQI, ATVI)

Includes: ATVI, EA, JMDT

Electronic Arts (ticker: ERTS), the world's largest video game publisher, announced last night it's buying Jamdat Mobile (ticker: JMDT), the top mobile gaming publisher, for $680 million. Electronic Arts will pay $27 in cash for each share of Jamdat stock, a 19 percent premium over the $22.77 JMDT closing price yesterday. This is the biggest acquisition EA has ever made. Jamdat chief executive Mitch Lasky will take over EA's mobile gaming unit.


EA Chairman Larry Probst: 'We decided we wanted to move really fast on this, so we joined with the leader in North America to enable our content to be deployed on mobile phones more aggressively here and globally.'

Jamdat CEO Mitch Lasky: 'We wanted to win worldwide [leadership], and we think this combined position will let us do it a lot faster than if we were to do it on our own.'

P.J. McNealy (American Technology Research): '[EA is] stepping in now as the dominant player in wireless games -- hands down.'

Greg Ballard, CEO of Jamdat competitor Glu Mobile: '[This acquisition] may be a signal to everyone watching that even the world's largest games company couldn't do this on their own.'

Nick Wingfield (Wall St. Journal - sub. req.): 'The Jamdat deal is a large one for the games industry. Outright acquisitions of sizable publishers are rare, in part because licensing deals for popular entertainment and sports brands often can't be transferred to a new corporate owner. Jamdat's Mr. Lasky said EA will be able to assume control of "virtually all" of Jamdat's licenses, including those for two of its most popular games, Tetris and Bejeweled.'

Quick comment: The deal looks good for EA -- Jamdat is the leader in the fastest-growing gaming market, while EA has recently reported a drop in revenues [read ERTS' latest conference call transcript], and just yesterday dropped some bad news on the current quarter's sales. The acquisition could cause trouble for EA competitors THQ (ticker: THQI) and Activision (ticker: ATVI) as they also scramble for position in wireless gaming.