EA to acquire BioWare and Pandemic for $860m

Electronic Arts has acquired independent developers BioWare and Pandemic from investment firm Elevation Partners.

Described as a move which “fills up a gap in our genre line-up” according to EA CFO Warren Jenson, the buy sees EA obtain two huge development resources with a raft of owned IP and multiple studios across the US, Canada and Australia that employ 800 developers.

Pandemic is best known for its work on the Mercenaries franchise, while BioWare is an acclaimed creator of story based RPG and adventure titles.

The two were bought by Elevation Partners in a deal overseen by EA CEO John Riccitiello (who at the time worked for Elevation) in 2005.

Since he returned to his post as CEO this year, many have speculated that EA will acquire the studios he had cherry picked two years ago.

“These are two of the most respected studios in the industry and I’m glad to be working with them again. They’ll make a strong contribution to our strategic growth initiatives on quality, online gaming and developing new intellectual properties,” said Riccitiello in the statement to the press about the acquisition.

“We also expect this will drive long-term value for our shareholders.”

The two studios will now become part of EA’s vast development resource, reporting to Frank Gibeau, head of the EA Games label. EA already had a deal in place to publish Mercenaries 2 – but BioWare is finishing games for Microsoft and Sony. At the same time, the two studios reportedly have 10 games in the works, six of which are based on owned IPs.

“We are truly excited by John Riccitiello’s new vision for EA,” said Ray Muzyka, co-founder and CEO of BioWare. “This vision is consistent with BioWare’s focus on crafting the highest quality story-driven games in the world. It will enable us to further the careers of the passionate, creative and hard working teams at BioWare Edmonton and BioWare Austin.”

In a conference call to investors after the deal – which is expected to close at the start of 2008 and is worth $860m – Jenson and Riccitiello explained some of the reasoning behind the move.

"We’ve looked at a lot of companies and have had our eye on these studios for several years," said Jensen. "This is a powerful combination of creative talent and portfolio strength.

"This acquisition fills up a gap in our genre line-up. We are currently underrepresented in key genres: RPG, action, and adventure."

Riccitiello said that his involvement with BioWare and Pandemic meant he would most likely gain “a personal financial benefit at some time in the near future” but added that an independent third party would be involved to make sure the transaction was above board.

The two also said that EA expects Pandemic and BioWare to generate some $300m revenue in both 2009 and 2010.