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EA changes conditions of DICE proposal

Publisher revises the conditions of its buyout deal after shareholders say, "No DICE".

Electronic Arts has changed one of the conditions of its bid for Swedish games developer Digital Illusions CE and extended the acceptance period until January 20th 2005 in a move that demonstrates the publisher's determination to acquire the firm.

Last week, key shareholders representing some 28 per cent of DICE stock rejected EA's proposed deal, which the developer's board of directors had previously recommended they accept, arguing that remaining independent was a more attractive option in light of forthcoming releases in the firm's popular Battlefield series - ownership of which is undoubtedly one of EA's key goals.

With their opposition taken into account and the original acceptance deadline of December 16th now expired, EA's offer would only net the publisher some 4,498,697 shares - or 44.5 per cent of the outstanding capital and votes in DICE - which would not be enough to satisfy the terms of its proposal, despite the compliance of second largest shareholder Bonnier & Bonnier AB and DICE employees with significant shareholdings. A condition of EA's bid was that it became owner of more than 90 per cent of the votes in DICE.

However, EA's latest move conditions the offer upon a lower acceptance level of more than 50 per cent of the total number of shares - representing more than 50 per cent of the capital and votes in DICE after dilution due to an employee option programme launched in 2002. As a consequence the publisher has also extended the acceptance period to January 20th. It has not, however, revised its offer, which still stands at SEK 61 in cash per share.

The outcome of the revised proposal should be made clear on or about January 26th, but given the existing shareholders' decision to talk to the financial press in Sweden last week, we expect there will be more to come to terms with in the coming weeks.

Regardless of the outcome, EA is set to publish DICE's Battlefield 2 on PC next year, along with PS2, Xbox and potentially Xbox 2 versions of Battlefield: Modern Combat.