A massive buyout has taken place within the world of video game development. One of the world’s biggest makers and distributors of video games, Electronic Arts, has agreed to buy out the holding company that owns BioWare and Pandemic Studios, two leaders in the industry for the princely sum of $860 million dollars. EA pays $620 million to the investors of VG Holding Corporation, the company that bought the two software developers two years back for $300 million, as well as $155 million in equity to employees, assume $50 million dollars in stock options and pay $35 million to cover the cost of the deal.

BioWare is the developer of the two “Star Wars: Knights of the Old Republic” and “Neverwinter Nights” games, both of which proved to be bestsellers and the choice of many for game of the year. Since those two licenses are owned by third parties the intellectual properties are not included in the EA deal. What is covered are all the original IPs that BioWare and Pandemic have created such as “Jade Empire”, “Mass Effect”, “Mercenaries” and “Saboteur”. As well BioWare is in development on a top secret massive multiplayer online game set for release sometime in 2009. That also becomes the property of EA.

The final aspects of the acquisition will take effect in January 2008 and both companies will be folded within the Electronic Arts family. All of the principal current executives and/or founders of BioWare and Pandemic are remaining at their companies during the transition and for the foreseeable future.