Jamdat shareholder sues over proposed EA buyout
Acquisition halted over claims of undervaluing mobile game firm
A Jamdat shareholder has filed a class action lawsuit which seeks to prevent Electronic Arts from acquiring mobile games firm Jamdat, citing unfair terms and an undervaluing of the company's financial worth.
The acquisition agreement, announced last week, would be the biggest single consolidation move seen in the mobile gaming space to date as EA's mobile division merged with Jamdat.
Stocks in Jamdat soared by almost 19 per cent following the announcement last week, and some analysts have placed the offer as exceptionally richly valued. In one instance, analyst Anthony Gikas of Piper Jaffray said Electronic Arts' proposed price was USD 200 million too high.
One shareholder categorically disagrees with the analysts however, and has filed a lawsuit to prevent the closure of the deal, asking the courts to declare the acquisition agreement unlawful and unenforceable on the grounds of selling too low at rates preferential to Electronic Arts.
Elliott Fox, the shareholder at the centre of the new legal action, stated: "the proposed acquisition is the product of a hopelessly flawed process that was designed to ensure the sale of Jamdat to one buying group and one buying group only, on terms preferential to Electronic Arts."
Fox argues that Jamdat directors failed to secure the highest price for the sale of the company, and is seeking to halt the new deal - which would mark the single largest acquisition in Electronic Arts' history.
Jamdat currently employs some 350 staff worldwide, and has enjoyed revenues of USD 202 million in its last quarter. The only mobile games company to have been floated on the stock market, shares in the firm had risen sharply following the acquisition announcement, closing at USD 26.65 yesterday afternoon.
EA plans to publish over 50 titles in the year following the acquisition, creating a powerful position in the mobile markets and mirroring the company's dominance in the traditional videogame space. The move would place EA in a much stronger market position than rival videogames publishers such as THQ and Ubisoft, who are also making inroads into the wireless gaming arena.