Hold everything – Playfish is still in play

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Last week we reported the rumors that VC-backed Playfish, the social games startup which has had phenomenal growth, was in the process of being acquired by games giant Electronic Arts for $250 million. However, nothing was confirmed at the time, and despite several press reports to that effect none of the companies involved has made a sound. That’s odd, because normally if an acquisition has really happened the companies get a statement out quick to quash the gossip mongers.

The $250m figure was equally odd because Playfish had not looked like it wanted an early exit by any stretch and was known to be looking for a much bigger figure. CEO Kristian Segerstrale has always said he wanted to “kill EA”, for instance. The startup has also raised $21m in funding from Accel Partners and Index Ventures.

In fact, we’ve learned that Playfish is still in play, and in all likelihood EA leaked the $250 million figure as a negotiating tactic, as this is more or less what it wants it wants to pay. Our sources say that Playfish is holding out for another offer, somewhere between $350m at the low end and $500m at the top end, either from EA or another suitor. Independently, Inside Social Games has uncovered similar chatter.

There is a further twist to the tail. Another source tells us EA was supposedly looking at casual games site King.com. However, we understand Index Ventures has been trying to convince EA of the merits of Playfish instead. King has backing from Apax Partners and Index, but at $43m, much more than Playfish.

In other words, if Index is an investor in both, perhaps they feel they’ll get a better exit multiple from Playfish than from King?

In addition Accel is probably keen for the Playfish deal as well. Despite backing promising big win companies like Kayak, GameForge, Qliktech, Alfresco, Seatwave – it has not yet had an exit from its current European fund.

In which case I wonder what Apax feels about possibly missing out on King.com being acquired? I think we can guess.

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