Officials from U.S. publisher Atari, Inc. have announced that the company has reached a definitive agreement to merge with French parent company and majority shareholder Infogrames.
Under the terms of the merger agreement, Infogrames will acquire the remaining outstanding equity interests of Atari (other than shares of common stock held by Infogrames or its affiliates, which will be cancelled) for $1.68 per share. The share price is equivalent to a cash payment of around $11 million, with the merger funded by Infogrames’ existing cash resources.
Following the merger, Atari will become a wholly-owned subsidiary of Infogrames. It is not subject to any financing conditions and the merger is expected to be completed in the third calendar quarter of 2008. The existing management of Atari, Inc. will formally join Infogrames at that time.
Although a special meeting of shareholders will be called this autumn, Infogrames’ existing 51.4 percent stake in Atari, Inc. gives it the power to approve the merger without the agreement of Atari’s other shareholders.
Infogrames officials have also revealed that the company will loan Atari $20 million, which will be used to fund Atari’s operational cash requirements between now and the completion of the merger later in the year.
Following the appointment of new Infogrames CEO David Gardner and ex-Sony head Phil Harrison, officials are hopeful that the merger will bring to a close a long period of financial underperformance for Atari, Inc., during which the company was forced to sell many of its most important intellectual properties and internal studios.
Commenting on the merger, Gardner said: "Bringing Atari U.S. and Infogrames businesses together will enable us to create a simplified global structure for our business as we seek to re-build a well-managed, cohesive and financially disciplined company. This is a key strategic event for Infogrames that will benefit all of our shareholders. I believe that this transaction will generate significant benefits for the Group."
Atari, Inc. president and CEO, Jim Wilson commented: "By joining Infogrames, we will have the opportunity to further transform Atari. As part of this newly integrated company, we will be better able to streamline operations and have a stronger platform for growth in North America."