Activision buys UK-based maker of racing games

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Wed Sep 26, 2007 5:51pm BST

(Recasts, adds executive comment, background, stock prices)

SAN FRANCISCO, Sept 26 (Reuters) - Activision Inc (ATVI.O) said on Wednesday it has bought the Britain-based maker of a popular racing video game, plugging a hole in the video-game publisher's lineup.

Activision did not say how much it had paid for Bizarre Creations, which makes the "Project Gotham Racing" series for Microsoft Corp's (MSFT.O) Xbox 360 gaming console.

Racing titles accounted for $1.4 billion, or 10 percent, of global video game software sales, Activision said. It is a category dominated by rival Electronic Arts Inc ERTS.O, which sells the popular "Need for Speed" and "Burnout" franchises.

Other top-selling racing titles include Microsoft's "Forza Motorsport" and Sony Corp's (6758.T) "Gran Tourismo."

The "Project Gotham Racing" series has sold more than 4.5 million copies since it debuted in 2001. The fourth installment of the franchise is due in October on the Xbox 360. Activision said it would publish a new game from Bizarre in 2009.

"They have a lot of cash and a hole in the portfolio that needed to be filled, said Mike Hickey, an analyst with Janco Partners. "They didn't have a representative racing game and now they do."

Mike Griffith, head of Activision Publishing, said in a statement: "Bizarre Creations will play an important role in our growth strategy as we develop an original new intellectual property for this important racing segment." Activision, the second-biggest U.S. publisher in terms of annual revenue, has a cash pile of nearly $1 billion.

Last year, Activision bought Red Octane, developer of the "Guitar Hero" series of games, for a reported $100 million.

The smash success of "Guitar Hero II" this year has helped drive up Activision shares 23 percent. In early afternoon trading, the stock was down 5 cents at $21.25.

(Reporting by Scott Hillis, editing by Brian Moss)

((scott.hillis@reuters.com, +1 415 677 2505)) Keywords: ACTIVISION BIZARRE/

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