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EA To Acquire BioWare Corp. and Pandemic Studios

Electronic Arts Inc. announced an agreement with Elevation Partners to acquire VG Holding Corp. -- the owner of both BioWare Corp. and Pandemic Studios. This acquisition gives EA a strong competitive position in key genres in interactive entertainment: action, adventure and role-playing games.

BioWare Corp. and Pandemic Studios have ten franchises under development, including six wholly owned games. BioWare Corp. is currently developing MASS EFFECT, which will be published by Microsoft in November, and is in the early development stages of a massively multiplayer online game. Pandemic Studios hopes to redefine open-world games with its upcoming MERCENARIES 2: WORLD IN FLAMES and SABOTEUR, in addition to several unannounced projects.

Pandemic Studios and BioWare Corp. employ roughly 800 people across four studios located in Edmonton, Canada; Los Angeles; Austin; and Brisbane, Australia.

"These are two of the most respected studios in the industry and I'm glad to be working with them again. They'll make a strong contribution to our strategic growth initiatives on quality, online gaming and developing new intellectual properties," said John Riccitiello, EA's CEO. "We also expect this will drive long-term value for our shareholders."

Pandemic Studios is led by Andrew Goldman, Josh Resnick and Greg Borrud. BioWare Corp. is jointly led by Greg Zeschuk and Ray Muzyka. These teams will join the EA Games Label run by Frank Gibeau, President of EA Games.

"Pandemic Studios remains focused on attracting the best talent and creating blockbuster action games," said Josh Resnick, President/Co-Founder of Pandemic Studios. "As a worldwide publishing leader, EA represents the ideal partner to bring our titles to market as global entertainment events."

"We are truly excited by John Riccitiello's new vision for EA," said Ray Muzyka, Co-Founder/CEO of BioWare Corp. "This vision is consistent with BioWare's focus on crafting the highest quality story-driven games in the world. It will enable us to further the careers of the passionate, creative and hard-working teams at BioWare Edmonton and BioWare Austin."

EA will pay up to $620 million in cash to the stockholders of VG Holding Corp. and will issue up to an additional $155 million in equity to certain employees of VG Holding Corp., which will be subject to time-based or performance-based vesting criteria. EA will also assume outstanding VG Holding Corp. stock options. In addition, EA has agreed to lend VG Holding Corp. up to $35 million through the closing of the acquisition.

The acquisition is subject to customary closing conditions, including regulatory approvals. The transaction is expected to close in January 2008. On a GAAP basis, the acquisition is expected to be dilutive to EA's fiscal 2008 results by approximately $0.30 to $0.40 due to non-recurring acquisition-related charges, stock-based compensation and amortization of intangible assets. This amount is a preliminary estimate based on currently-available information and is subject to change. On a non-GAAP basis, the acquisition is expected to be dilutive to EA's fiscal 2008 fourth quarter results by approximately $0.05. This amount is a preliminary estimate based on currently-available information and is subject to change.

Electronic Arts Inc. (EA), headquartered in Redwood City, California, is the world's leading interactive entertainment software company. Founded in 1982, the company develops, publishes, and distributes interactive software worldwide for video game systems, personal computers, cellular handsets and the Internet. EA's homepage and online game site is www.ea.com. More information can be found at info.ea.com.

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