LISTED IP E-Game Ventures Inc. is selling its core game publishing business to its chief competitor, Level Up! Inc. (LUI), in exchange for equity and cash just two weeks after saying it plans to diversify into new sectors that may include food, entertainment and hotels.
E-Games said in a Philippine Stock Exchange filing on Tuesday that it has reached an agreement with LUI to transfer “most” its titles and assets relating to the game publishing business to LUI. Publishing operations of E-Games will also be spun-off to LUI subsidiary Playweb Games Inc.
E-Games will receive an undetermined amount of cash and equity in LUI as well as a commercial interest in Playweb, the disclosure showed. It was not immediately certain what form LUI’s ownership structure will take after the transaction.
“We will disclose more on closing date,” E-Games President Enrique Gonzalez said in a text message on Tuesday.
The merging of the gaming segments of E-Games and LUI would create the country’s biggest entity in the online games market. Both firms operate popular massively multiplayer online role-playing games like Cabal, Audition, Pointblank, Ragnarok, Grand Chase, Rohan and Bounty Hounds.
Gonzalez declined to comment further on the how the spin-off would affect E-Games’ current strategy.
Changes to the company’s revenue stream have already shifted dramatically following the acquisition of the Netopia chain of Internet cafés from Philippine Long Distance Telephone Co. unit ePLDT Inc. last year.
E-Games booked P337.1 million in revenues during the nine month period of 2011, a gain of 155 percent, with roughly half that amount coming from Internet cafés.
The company announced earlier this month that its board approved the expansion of its primary purpose to give it flexibility to enter new businesses and to take of advantage of growth segments in the country.
E-Games had 5.5 million active users at the end of September last year while similar figures for LUI, considered an online games pioneer in the Philippines, were not immediately available.
E-Games shares rose 5.4 percent to P0.195 each, giving it a market value of P3.7 billion on Tuesday.
