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EA buys interest in French rival UbiSoft

Stake will be purchased from Talpa Beheer

As the vidgame biz continues to sizzle, the nation’s premier player, Electronic Arts, announced plans Monday to buy a 19.9% stake in smaller French rival UbiSoft Entertainment.

The stake will be purchased from Talpa Beheer, the investment vehicle of billionaire Dutch TV mogul John de Mol — a sign of the growing sympathy between the two media.

UbiSoft said it would consider the acquisition hostile until EA declares its intentions.

EA wasn’t discussing its next move. But a spokesman said the UbiSoft stake was up for sale and “was going to come onto the market one way or the other.”

He said Talpa Beheer approached EA. “We decided if these shares were going to be for sale, we’d buy them.”

Move makes EA one of UbiSoft’s single largest shareholders, but stops short of the 20% threshold that would ring regulatory bells in France and at the European Commission.

UbiSoft is one of Europe’s top three videogame companies, publishing such titles as “Prince of Persia: The Sands of Time” and Tom Clancy’s “Splinter Cell.” It has 2,352 employees and annual sales of close to $620 million. Giant Electronic Arts posts revenue of about $3 billion a year.

The savvy move ensures the biggest player in the market will have a seat at the table if and when UbiSoft contemplates a merger — which top execs have hinted may be a possibility. As the sector consolidates, it’s getting harder for small and medium-sized players to compete with behemoths.

EA stock, something of a Wall Street darling, nosed up 50¢ to $59.94.

In a note, Credit Suisse First Boston applauded the deal. “UbiSoft has significant assets that have been underutilized by company management. While this is a purely financial move now, a deeper relationship between the two companies makes sense, particularly ahead of the next console cycle,” the bank said.

Financial terms weren’t released, but CSFB figures it cost EA about $85 million. Deal still needs a greenlight from U.S. regulators.

The game business is one of the hottest topics in media lately, with moguls from Disney’s Bob Iger to Viacom’s Sumner Redstone peppered with questions about their intentions in the field. Iger said recently that the Mouse plans to expand in the area through internal growth or acquisitions. Redstone has personally built up a controlling stake in Midway Games, a once-moribund small player that’s been cutting a number of deals.

Game quality has improved dramatically and will take another jump forward with the next generation of consoles. The shift is mostly demographic as a growing swath of youngsters see vidgames as a viable alternative to television — and keep on playing year after year.

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