BAM! Entertainment buys VIS in $8.5 million share deal

Publisher BAM! Entertainment, recently threatened with delisting from the NASDAQ for a second time, has announced that it is to buy Scottish developer VIS Entertainment in a share deal worth around $7 million.

The surprising deal consummates a lengthy and often turbulent relationship between the two companies, with VIS notably taking over BAM's London studio last year only to shut it down a few months later.

Under the terms of the deal, BAM will issue nine million new shares in return for the entire share capital of both VIS and it separately funded development subsidiary, State of Emergency Development (SOED).

Yesterday, that valued VIS at around $7 million; however, shares in BAM have skyrocketed since the deal was announced, and a 22 per cent rise in their value today now sees the deal worth $8.55 million.

This may be the clearest indicator of why BAM is keen to pursue this deal - as well as giving the company a potentially strong-selling title for its currently relatively unimpressive portfolio, in the form of State of Emergency 2, it may also give it the boost needed to send its share price past the $1 mark and thus avoid being delisted from the NASDAQ.

At time of going to press, BAM was trading at $0.95 - very close to the $1 mark, although it's thought that the company needs to trade at or over $1 for ten consecutive days to satisfy NASDAQ officials.

What's less clear is the advantage to VIS Entertainment, which has seen some tough times financially over the past year - including the shutting of a studio on the Isle of Wight as well as the previously mentioned London studio - but was trialling an innovative funding method for State of Emergency 2 which saw investors injecting cash directly into the project, through a holding company, rather than into the developer.

VIS president and CEO Chris van der Kuyl is expected to join the senior management team at BAM, along with VIS chief technical officer Paddy Burns, while van der Kuyl and another non-executive director of VIS will join the BAM board.

Statements from both companies point at a deal which is as much a merger as an acquisition, with BAM CEO Ray Musci pointing out that there is "little or no overlap between the businesses," and other comments suggesting that intention is to create an extended business combining the operations of both firms.

Indeed, van der Kuyl describes the deal as a "marriage of developer and publisher," which may well indicate VIS' thinking on the affair. Although BAM is a small player in the publishing market - and not, in general, a very well regarded one - this deal will in effect give VIS the ability to publish its own titles through an existing publishing and distribution network.

In the short-term however, only State of Emergency 2 is confirmed as a BAM title - and VIS has a number of projects in development for other publishers which it must finish before working on BAM-published games.