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Infogrames announces Namco Bandai deal

Companies form strategic partnership to provide Namco with Europe- and Asia-wide distribution

Infogrames Entertainment has revealed that a deal is in place with Namco Bandai Games Europe for the French publisher to distribute Namco's titles across its distribution network in Europe and Asia.

Under the terms of the deal Namco Bandai will acquire 34 per cent of Infogrames' European and Asian distribution operations and Infogrames will "regroup" those operations into a standalone entity, which would then distribute the two companies' products exclusively in both territories.

Infogrames will retain the remaining 66 per cent share of the company, and will expect increased revenues from that business as a result.

A statement released by Infogrames identifies the following benefits of the deal:

  • A highly efficient network of distribution across Europe and Asia which can be leveraged to deliver the products of both Namco Bandai and Infogrames, thereby increasing revenues of the distribution company
  • Economies of scale in operating the distribution network generating significant cost savings
  • Access to Namco Bandai’s and Infogrames’ extensive product portfolio on an exclusive basis
  • Opportunity to establish distribution contracts with other global video game companies

David Gardner, CEO of Infogrames - and one of the key men previously credited with building up EA's mighty distribution network - said of the deal: "I am delighted that this transaction strengthens our outstanding partnership with Namco Bandai, one of the industry's greatest creators and publishers of video games, and is a significant development in Infogrames' reinvention.

"The agreement will give Infogrames a guaranteed and strengthened product portfolio and provide us additional means to invest in new product development for packaged and online markets."

The terms of the deal, in summary, were released as follows:

  • The proposed enterprise value of the newly formed entity comprising the distribution operations would be EUR 95 million on a 'cash free, debt free' basis, including a EUR 15 million earn-out mechanism based on the actual audited results of the newly formed entity for the fiscal year 2008-9.
  • Until June 30, 2012 Infogrames will benefit from a put option to sell its remaining stake of 66 per cent in the newly-formed entity to Namco Bandai.
  • From June 30, 2012 to June 30, 2013, Namco Bandai will benefit from a call option over 66 per cent of the newly-formed entity held by Infogrames.
  • For the purposes of Namco Bandai's call option and Infogrames' put option, both parties have agreed that the enterprise value for 100 per cent of the newly-formed entity would be in the range of EUR 60 million and EUR 190 million based on an EBIT multiple of 7 of the entity at the time of the exercise of the option.
  • Formal closing of the transaction is subject to the satisfaction of customary conditions, including notably the satisfactory completion of due diligence, and is expected to take place before the end of February 2009.

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