GameTavern - Microsoft to Buy VU?

Here's the latest update on Microsoft and VU:

Quote:

Investment bank Investec said on Friday that it believed Microsoft Corp. was in talks with French media conglomerate Vivendi Universal about buying Vivendi's video game business for as much as $2 billion. A spokeswoman for Vivendi Universal's game unit declined to comment. A Microsoft spokeswoman could not be immediately reached for comment.

Jeff Van Rhee, Investec's director of enterprise software research, told Reuters he had received indications a deal was in the works. "There was some pretty actionable data that said something had just happened and things were heating up pretty quickly," he said.

Speculation has been rampant for months on the fate of Vivendi Universal Games, which publishes well-known PC titles like "WarCraft" and "Diablo" and games based on J.R.R. Tolkien's "Lord of the Rings" books.

The division, which is strongest in PC games but also has significant console game operations, has been reported at various times in the last year to be either up for sale or in preparations for an initial public offering.

Sources told Reuters in mid-December that Vivendi had had at least preliminary conversations about the potential for a deal with Microsoft, Sony Corp. and Electronic Arts Inc..

Van Rhee, in his note, reiterated past speculation that Vivendi has been seeking a price of anywhere from $1 billion to $2 billion for the games unit. Most financial analysts have characterized the lower end of that range as more likely.

Microsoft, which bought British games developer Rare for $375 million cash in September, has said it would be most interested in acquiring game developers that could add to its internal product efforts rather than a full-fledged publisher.

One of the main criticisms of the company's Xbox video game console has been the lack of internally produced hit titles, though the company did find success with the military action game "Halo" in 2001 and 2002.

A number of video game companies have warned that their results for the December quarter would be weaker than previously expected as retailers became more conservative in their ordering, only taking large quantities of titles with proven hit potential.

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