TomSoft

Electronic Arts to buy Jamdat in $680 mln deal

December 9th, 2005

Important news for our industry, mobile gaming: EA, the biggest game publisher, just acquired Jamdat, the biggest (for now! ) player in this space….

Jamdat Mobile (JMDT:Nasdaq – commentary – research – Cramer’s Take) surged in after-hours trading Thursday following news that Electronic Arts (ERTS:Nasdaq – commentary – research – Cramer’s Take) agreed to buy the cellphone-game publisher at a 19% premium to its close. Electronic Arts will pay $27 a share for Jamdat and assume outstanding stock options, for a total deal value of $680 million. The deal is expected to close during Electronic Arts’ fourth quarter. 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.

The deal value Jamdat at 680$ million…At this price, a very good deal for Jamdat…. A few comments:

“EA overpaid by $200 (million),” Piper Jaffray analyst Anthony Gikas said in a client note, adding the amount was not material

“We’re not sure why the company would spend so much to get into the mobile market when it appears that they could have leveraged their content on their own for less money,” Wallace said in a note. He added that EA will probably spend more than $750 million this year on research and development.

“That’s a lot of console games that could have been developed (or bought),” he said.

Still, analysts liked the deal, saying that Jamdat and EA are each better off together.

EA “has had some fits and starts trying to build its wireless division” and adjusting to a “buy” strategy resolves investor qualms about the company’s relative lack of presence in that market, said Paul-Jon McNealy, video game analyst at American Technology Research.

Jamdat

Entry Filed under: WirelessGames