The Ottawa Citizen from Ottawa, Ontario, Canada • 48

5 D8 THE OTTAWA CITIZEN TUESDAY, DECEMBER 21, 2004 BUSINESS Electronic Arts buys 19.9 of French rival Ubisoft With average development for a game taking two years and costing $5 million, market researcher DFC Intelligence estimates the break-even point at sales of 500,000 units. BLOOMBERG NEWS BY RUDY RUITENBERG the Second World War game Brothers in Arms Road to Hill 30. Chief Executive Yves Guillemot has forecast third- least 10 per cent in its fiscal year through March, helped by the third installment in its Splinter Cell series and quarter sales of 180 million to 190 million euros, and fourth-quarter revenue may be about 230 million euros. Boll World BROCKVILLE 1000 Islands Mall 613498-1245 CORNWAU Cornwall Square 613932-1676 KANATA 510 Earl Gray Drive 6135927778 NEPEAN SO Market Place Ave 613823-2355 1541 Merivale Read 6137234400 Bayshore Shopping Centre 6138204077 ORLEANS Place d'Orleans 613 830-5544 OTTAWA 1 566 Cariing Avenue 613 724122 Billings Bridge Ptaa 613 733-8992 Cariingwood Mall 613798-9875 Rideau Centre 613 563-3688 St- laurent Shopping Centre 613 741-7106 PEMBROKE 1018 Pembroke Street East 613732-2825 SMITHS FALLS 1 6 Beckwrth Street South 613283-7993 BOXING WEEK COMES EARLY! RED Audiovox8910 CAMERA PHONE SAVE '30 PARIS Electronic Arts the world's largest maker of video games, bought 19.9 per cent of French competitor Ubisoft Entertainment SA, the maker of games based on Tom Clancy novels. Ubisoft shares had their biggest gain ever.

Electronic Arts of Redwood City, California, acquired the stake from Talpa Beheer BV, the investment company of Dutch billionaire John de Mol, Chief Financial Officer Warren Jenson said in an interview today. He declined to say what the U.S. company paid, or whether it plans to buy more shares. Ubisoft said it considers the purchase by Electronic Arts "hostile." "Ubisoft is an ideal target because they have a good development capacity," said Jean-Michel Salvador, an analyst at Fideuram Wargny. "Electronic Arts is built essentially on sports and movie-based adventures." Ubisoft's action games are "the type of games they lack," he said.

Microsoft Corp. and Sony Corp. will introduce more powerful gaming consoles in 2005 or 2006 to allow movielike quality, smooth motion and bigger games. To keep up, game makers must spend more on development, raising the risk per title. Electronic Arts had 27 game titles that sold more than 1 million copies each in the most recent fiscal year, compared with Ubisoft's seven.

Shares in Ubisoft, whose games include Prince of Persia Warrior Within and Tom Clancy's Splinter Cell Pandora Tomorrow, rose 4.18 euros, or 25 per cent, to close at 21.16 in Paris, for a market value of 374 million euros ($501 million). The shares had their biggest gain since they started trading in July 1996. Ubisoft considers the acquisition of the stake by Electronic Arts as "hostile" because it is uninvited and unwanted, spokeswoman Nathalie Balourdet said. She said the U.S. company hasn't been in contact with Ubisoft about its plans.

"This group of shares was coming to the market one way or the other, we felt it was important that we would preserve our options," Mr. Jenson said. "If Ubisoft would ever consider a merger this block of shares could be very important." Electronic Arts rose as much as $1.61, or 2.7 per cent, to $61.25, and traded at $60.62 as of 11:48 a.m. in New York. Ubisoft was founded in 1986 by the five Guillemot brothers, and first sold shares to the public in 1996.

As of June 24, the Guillemot family held about 17 per cent of Ubisoft's capital and 26.4 per cent of the company's voting rights, according to the game maker's annual report. Electronic Arts may be "taking a stake to start discussions with management," Mr. Salvador said. "Even if they don't buy it, it gives confidence in Ubisoft. They don't take a stake for the sake of having a stake." Splinter Cell Pandora Tomorrow has sold more than 2.8 million units, Ubisoft said in October, while Electronic Arts said Madden NFL 2005 sold more than 4 million copies.

The French game maker's software publishing revenue, excluding distribution for third parties, was 493 million euros in its fiscal year through March, compared with Electronics Arts publishing revenue of $2.5 billion. Ubisoft says it's focusing on fewer titles of higher quality to lift sales. "This is a company that we admire, both in terms of the company and managing team," Mr. Jenson said. "We expect to be treated as any other shareholders." Mr.

Jenson said it's "way too early" to talk about a possible purchase of Ubisoft, adding that Electronic Arts doesn't comment on acquisitions. Buying the Talpa stake is "more offensive as opposed to defensive," the executive said. Ubisoft expects revenue to rise at Ale Ball Mobility ARNPRfOR 6-75 Elgin Street West 613 623-7890 BROCKVILLE R.R. 3 Highway 2 West 613 342-5999 CARLETON PLACE 10511 Highway7 and 15 Plaza 613 253-0177 CORNWALL 1315 Brookdale Avenue 613 933-7244 OTTAWA 1568 Cariing Ave. Suite 201 613 798-2355 2184 Thurston Drive 613 248-2323 PETAWAWA 3471- Petawawa Blvd.

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