Some Quick Reactions to Ubisoft's Acquisition of the Tom Clancy Brand

As soon as the news popped up in Newsweek's inbox, they shot out a couple of queries to industry observers to get their take on the deal. First up was the ubiquitous, loquacious and perspicacious Wedbush Morgan analyst Michael Pachter.

After Ubisoft's conference call, wherein CEO Yves Guillemot added some further color to the deal, Pachter wrote Newsweek back with some additional thoughts:

"It looks like the total purchase price is around 60 million Euros cash [$93 million U.S. dollars] over three years, 20 million Euros earn-out [$31 million U.S. dollars], so total is around $128 million at current exchange rates. The immediate benefit is 5 million Euros [$7.7 million U.S. dollars] in operating profit enhancement, and I would guess that royalties from books and other merchandise are around 1-2 million Euros [$1.6-$3.2 million U.S. dollars] a year now. They have the opportunity to exploit this and grow it into a real business, and that's where the upside lies. The initial purchase price is therefore around 10x what they will see in immediate profits, so it's a reasonable price to pay."

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