Club Penguin In Acquisition Talks With Sony For $500+ million

It’s been rumored for a while that Montgomery & Co. is representing virtual world Club Penguin in a sale transaction. It looks like the company is locked in talks, possibly exclusive, with Sony, and the price is “at least half a billion” says a source close to the deal.

We mentioned Club Penguin last month when a competitor launched from IAC called Zwinktopia. The company is killing it – projected revenues of $65 million in 2007 with $35 million in profit. Having nearly 50% bottom line margin is exceptional. The company has around 500,000 active users.

A stumbling block in the negotiations appears to be a disagreement over charitable contributions. Club Penguin donates a significant portion of profits to charity and wants this policy to continue post-acquisition. Sony reportedly isn’t hot on the idea.

Club penguin is a virtual world for young kids. Sony may see significant synergies by tying it into their Playstation platform. Other bidders that were in talks until very recently reportedly include AOL, Disney and Viacom.

This is good news for Club Penguin’s virtual world competitors as well – which broadly includes Second Life, Runescape, Gaia, Habbo Hotel, Cyworld, Neopets, Webkinz and others.