Infogrames to acquire Cryptic Studios

Infogrames Entertainment today announced that it is acquiring MMO developers Cryptic Studios, the company behind City of Heroes and City of Villains. Cryptic is also working on Star Trek Online and an unannounced title. Infogrames also owns Atari.

Cryptic Studios Inc.: a strategic acquisition, contributing to the creation of a 21st century online game company Leading MMO game creator, developer and operator will provide state-of-the-art games and technology expected to boost Atari’s online business growth The transaction encompasses all of Cryptic’s proprietary IP, tools, technology and work-in-progress and integrates all members of the leadership team and employees into Infogrames. This acquisition is a critical step in the implementation of Infogrames strategy to become a leading online game developer and publisher. 

Cryptic is currently developing three unique MMO franchises, planned for release over the next three years on PC and next-generation consoles, including Champions Online to be released in 2009 and Star Trek Online to be released in 2010. A third game currently in development will be announced in the near future.

Established in 2000 and headquartered in Los Gatos, California, USA, Cryptic has a proven track record of delivering successful MMO franchises (City of Heroes and City of Villains sold to NCSoft) generating over USD 100 million in lifetime revenues and up to 180,000 peak subscribers.

Infogrames’ offer for all of Cryptic’s equity is:

* USD 27.6 million (i.e. approx. EUR 21.7 million) upfront cash payment at closing.

* A potential earn-out mechanism for a maximum amount estimated as of today at USD 27.5 million (i.e. approx. EUR 21.6 million).

* USD 17.8 million to be paid in cash, USD 6.7 million estimated as of today to be paid in Infogrames shares (i.e. up to 889,242 shares) and USD 3.0 million estimated as of today to be paid to holders of Cryptic stock options either in Infogrames shares (i.e. up to 407,603 shares, subject to Infogrames’ shareholders approval) or in cash. 

* Earn-out is based on the completion of 2010/2011 revenues targets of Champions Online and Star Trek Online, half of the earn-out in relation to Champions Online online revenues being paid on June 30, 2010, the other half on March 1st, 2011.

* A bonus for a maximum amount of USD 20 million (i.e. approx. EUR 15.7 million) is to be paid in cash or Infogrames stock (at the option of Infogrames, subject to the shareholders’ approval), if Champions Online and Star Trek Online’s 2010/2011 online revenues over perform revenues targets. This bonus is to be paid on August 2010 and on May 2011.