Extremely Happy Feet: Disney Acquires Club Penguin For Up To $700 million

Club Penguin, a social network/virtual world that has been on the market for some time, was acquired by The Walt Disney Company and announced today. An earlier deal with Sony fell apart over valuation and Club Penguin’s policy of donating a substantial portion of profits to charity.

The company, which launched in October 2005, has 700,000 current paid subscribers and 12 million activated users, primarily in the U.S. and Canada.

The WSJ says the purchase price is $350 million in cash. Disney could pay up to another $350 million if certain performance targets are reached over the next couple of years, until 2009.

We mentioned Club Penguin a couple of months ago 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.

I recently spoke to an exec of one of the companies that took a long look at Club Penguin before deciding to pass. They said the charitable donations were a big factor in passing. He also mentioned that much of the success of the company was driven by movies such as Happy Feet. How much longer are penguins really going to be the cool thing, he wondered.