updated 12/9/2005 1:14:25 PM ET 2005-12-09T18:14:25

Video game giant Electronic Arts Inc. has agreed to acquire mobile game provider Jamdat Mobile Inc. in a deal worth approximately $680 million, the companies said Thursday.

Electronic Arts said it will pay $27 in cash for each share of Jamdat stock and assume outstanding stock options. That would be a 19 percent premium over the $22.77 closing price Jamdat reached on the Nasdaq Stock Market before Thursday’s deal was announced.

The acquisition, which is expected to close in EA’s fiscal fourth quarter, which ends March 31, would quickly give the world’s leading video game publisher a stronger foothold in the growing and lucrative mobile game market, estimated to be about $1 billion globally. It’s the biggest acquisition in EA’s history.

Jamdat, based in Los Angeles with 350 employees worldwide, is one of the world’s leading publishers in wireless entertainment applications. Its portfolio includes hit cell phone games such as Tetris, Bejeweled, and Jamdat Bowling.

“We decided we wanted to move really fast on this, so we joined with the leader in North America to enable our content to be deployed on mobile phones more aggressively here and globally,” Larry Probst, EA chairman and chief executive officer, said in a phone interview.

EA, based in Redwood City, Calif., said it plans on publishing over 50 games for mobile phones during the first year of the acquisition.

Upon closing the deal, the mobile businesses of both companies would be combined into one team, and Jamdat chief executive Mitch Lasky is expected to lead EA’s mobile games business worldwide, the companies said.

EA said it expects the acquisition to result in a one-time charge of 10 cents to 15 cents per share in its fiscal fourth quarter. Analysts polled by Thomson Financial were expecting the company to earn 28 cents per share for the fourth quarter on $749 million in revenue.

Jamdat and other gaming companies such as Mforma Group Inc., have been jockeying for years to lead the fledgling cell phone gaming market. The market is expected to grow to as much as $5 billion over the next few years as handsets are better equipped to handle multimedia and good graphics.

The decision for the buyout was an offensive move, not defensive, Lasky said during a conference call with analysts. “We wanted to win worldwide (leadership), and we think this combined position will let us do it a lot faster than if we were to do it on our own,” he said.

EA, which built its $3 billion-a-year empire on sports franchise games such as “Madden NFL” and the all-time No. 1 video game “The Sims,” had been gradually beefing up its portfolio of cell phone games in the past year.

It was a relative latecomer to the field, but analysts had long predicted it was only a matter of time before the game publishing titan would boost its presence.

American Technology Research analyst P.J. McNealy put it this way a year ago: companies like Jamdat were simply keeping the seat warm for EA.

Now, it looks like EA is in the driver’s seat.

“They’re stepping in now as the dominant player in wireless games — hands down,” McNealy said Thursday.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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