In a move that may help video game giant Electronic Arts (NASDAQ: ERTS) compete more effectively with Microsoft (NASDAQ: MSFT)'s new Halo 3, the company has agreed to buy two game publishers.
According to The Wall Street Journal, EA will purchase VG Holdings Corp., the parent company of game makers BioWare Corp. and Pandemic Studios, the studios behind the nice ultra-violent game Destroy All Humans! The companies were owned by Elevation Partners; according to the Journal, "The deal is the first time Elevation, which counts U2 singer Bono among its partners, has cashed out of one of its investments."
EA said it will pay as much as $620 million to VG Holdings and $155 million in equity to certain employees.
Electronic Arts could use the help. Halo 3 sold $300 million in its first week on the market. EA does $700 million in a typical quarter. And games like Destroy All Humans! give the company a product to attract young male buyers of games in which large numbers of humans and aliens are destroyed in short order.
At $59, EA's stock is near its 52-year top. The new purchase could help push it higher.
Douglas A. McIntyre is a partner at 24/7 Wall St.
