This may come as a surprise but local online game companies Level Up! and E-Games has finalized talks of a merger. eGames made the disclosure earlier this morning at the PSE (since it’s a publicly listed company).
A copy of the press release is shown below:
MAKATI, Philippines; 14 February 2012 â€“ IP E-Game Ventures Inc. (E-Games) and Level Up! Inc. (LUI) have reached an agreement to merge their Philippine online game publishing businesses.
In accordance with the agreement, most of E-Game’s titles and assets relating to its game publishing business will be transferred to LUI and the publishing operations of said titles will be merged into LUI’s associated online game publishing company, Playweb Games Inc. In exchange, E-Games will receive equity in LUI, a commercial interest in Playweb Games Inc. (game publisher and operator of all LUI game titles and services), and a cash consideration. The completion of the deal is subject to closing conditions.
E-Games is the first listed online gaming company in the Philippines (PSE: EG) and is the only such listed company to date. It spearheaded the free-to-play game model and has over 15.9 million registered gamers and an average of 3.5 million active users per month. It is aggressively expanding its Internet cafÃ© network through acquisitions (Netopia and CyBr cafes) and franchising and will incorporate other services such as food & beverage and remittance services. Recently, E-Games has also acquired the rights to operate and sell advertisements for the NBA.com Philippine portal. It is currently developing game enhancement technologies between its Internet cafes and online games titles and is eager to extend these synergies with LUI online games.
LUI pioneered the online game business in the Philippines. Its parent company, Level Up! International Holdings (LUIH), has a subsidiary in Brazil which likewise pioneered and leads the online game publishing business there. Aside from its presence in the Philippines and Brazil, LUIH also has a joint venture in the United States with an established Korean developer.
E-Games and LUI, as a merged entity, are expected to account for the majority of the Philippine online games market. The merged entity and its associated company, Playweb Games, Inc., will have the widest gaming pre-paid cards and PINs distribution network and offer a portfolio of hugely popular and successful games between them. These include top Massively Multiplayer Online Role-Playing Games (MMORPGs) such as Cabal, Audition, Pointblank, Ragnarok, Grand Chase, Rohan and newly launched (by LUI) Bounty Hounds.
The merger is expected to strategically benefit both companies as a result of future operational synergies and savings.
The consolidation might be the result of a thinning market. We earlier wrote about this issue before in “Is the local Online Gaming industry in trouble?“.