EA, Jamdat Talks Started in Aug., SEC Filing Reveals

The filing provided the clearest account to date of the work up to the acquisition deal, which calls for Jamdat’s mobile gaming operations to be merged into a worldwide organization owned by EA and under the leadership of Mitch Lasky, now Jamdat CEO. The deal was approved by both companies’ boards but requires shareholder and regulatory approvals. The filing’s detailed account gave Jamdat another opportunity to refute a recent lawsuit filed against it in L.A. Superior Court by a investor who accused Jamdat board members of failing to seek the “highest price reasonably available” for it in the acquisition (CED Dec 15 p7). Jamdat Mktg. Vp Bob Aniello’s said at the time that the suit’s claims were “without merit and we will defend ourselves vigorously.”

Jamdat said in the filing that Lasky and EA Vp- Corporate Development Owen Mahoney first met in Palo Alto on Aug. 29 “to discuss matters unrelated to a potential business combination” and, “during this meeting, Mr. Mahoney raised with Mr. Lasky the possibility of a business combination between the 2 companies.” Jamdat said Lasky stated at the time that he and Jamdat’s board “were always willing to consider potential alternatives that could enhance stockholder value [but] no specific terms of a transaction were discussed at this meeting.” Jamdat said that, in early Sept., Lasky and Mahoney had various phone conversations “during which they agreed that each of them would meet with their respective senior management teams regarding a potential business combination, and that subsequently the 2 senior management teams would meet together to discuss a potential business combination.” On Sept. 20, EA CEO Larry Probst, EA Worldwide Studios Pres. Paul Lee and Mahoney met with Lasky and Jamdat CFO Michael Marchetti at Jamdat’s hq. During this meeting, Jamdat said, Lasky and Marchetti “discussed the strategic rationale for a possible business combination [but] no specific terms of a transaction were discussed at this meeting.” Lasky indicated that he would “need to have guidance” from Jamdat’s board regarding whether to engage in more detailed discussions about a transaction with EA.

Later that month, Jamdat said, “Lasky made contact with another potential bidder,” which it didn’t name, “regarding a potential business combination or strategic relationship that could enhance stockholder value.” Jamdat said all discussions with the latter company “were preliminary in nature and no specific terms of a transaction were discussed.” On Sept. 30, Lasky and Mahoney had a phone conversation during which a business combination between EA and Jamdat was raised again, Jamdat said. Lasky indicated that Jamdat was “willing to consider all of its potential strategic alternatives, including the possibility of entering into a business combination transaction with another party.”

Jamdat said it entered into mutual confidentiality and nondisclosure agreements with both suitors. It said that Mahoney told Lasky in an Oct. 6 phone call that EA wanted to move ahead with discussions about a combination and asked that the companies enter into an agreement “pursuant to which we would agree to negotiate exclusively with Electronic Arts regarding a potential transaction.” Jamdat’s board held a special meeting one day later, during which it discussed engaging a financial adviser to explore the company’s strategic alternatives. Jamdat said the board concluded “that it was not appropriate to enter into an exclusivity agreement at that time due to the preliminary nature of Electronic Arts’ interest, the fact that we had engaged in discussions with another potential acquirer and the board’s desire to consult with a financial advisor.”

Jamdat said it continued to talk with both suitors after engaging Credit Suisse First Boston as a financial advisor but EA indicated on Oct. 25 that it planned to make an offer of $25 per share to buy Jamdat. Jamdat said EA warned, however, that it was “not willing to participate in a multi-party competitive bidding process.” One day later, Jamdat received a written, confidential, non-binding expression of interest from EA’s rival to buy all outstanding shares of common stock in cash with “a range of possible prices” mentioned, Jamdat said. The filing indicated that Jamdat received “expressions from other interested parties” as well but it didn’t name them either. The company said it discussed all the proposals with its board, which “determined that the range of possible prices” cited by EA’s main rival in the bidding war “was too broad to warrant a definitive response.”

Jamdat said it then received another offer from EA’s main rival, for “less than $27 per share in cash” and EA said on Nov. 16 that it could be willing to increase its price to $27 per share. Lasky informed EA that Jamdat would be willing to “work towards an exclusive arrangement” with EA “to consummate a transaction” at that price, subject to the approval of Jamdat’s board, it said. Jamdat said it received a draft of a merger agreement from EA’s rival Nov. 16 and a draft of an exclusivity agreement from EA one day later. Jamdat’s board agreed to accept EA’s proposal Nov. 23 after much discussion about the benefits of each offer -- and after EA’s rival didn’t increase its offer, Jamdat said. Jamdat said it then notified the other company that it planned to accept EA’s offer and the other company confirmed that it was still not prepared to boost its offer. That officially put an end to the bidding war. Jamdat’s board unanimously decided Dec. 8 the EA deal was in the best interests of Jamdat and its shareholders, it said.

The filing said Jamdat still plans to hold the special stockholders meeting to vote on the EA proposal but didn’t provide a date.

Separately, EA declined to comment on published reports that the publisher recently signed a deal with the National Hockey League Players’ Assn. (NHLPA) giving it exclusive rights for NHL videogames -- but the deal collapsed after the NHL objected.