Empire Acquires eJay

Empire makes music software creator a subsidiary

Posted by Staff
The Board of Empire Interactive PLC (?Empire? or ?the Company?) is pleased to announce that the Company has bought a newly constituted German company, eJay Entertainment GmbH for a cash consideration of EUR 28,000, of which approximately EUR 25,000 represented eJay Entertainment GmbH?s cash balance as at 5 March 2002.

Empire?s new subsidiary, eJay Entertainment GmbH will pay EUR 200,000 to the administrator of eJay Aktiengesellschaft ("eJay AG") for the tangible fixed assets of eJay AG. eJay Entertainment GmbH will be initially capitalised at EUR 100,000, with 65 per cent. owned by Empire and the remaining 35 per cent. owned by certain members of the existing management team of eJay AG.

EJay AG, based in Stuttgart, Germany, is one of the world?s leading creators of music entertainment software. EJay AG?s main activity is the development of music software applications which can be used currently on a PC platform for creating, mixing and administrating music. A key to the popularity of the eJay brand has been the ease with which even unsophisticated users can create professional-sounding modern music soundtracks. EJay AG?s award winning software is available in 18 languages and has sold more than 3 million copies in over 50 countries to date.

The pure asset deal does not include any of the existing debts or liabilities of the insolvent eJay AG. The existing finished goods stock of eJay AG will be purchased by Empire Interactive Europe Limited (?EI Europe?) for EUR 200,000. EI Europe will be the distributor of the product worldwide. The intellectual property of eJay Entertainment GmbH that includes the software back catalogue, software in progress and trademarks will also be purchased by EI Europe from eJay AG. The minimum consideration payable is EUR 150,000 and the maximum consideration is EUR 400,000 dependent on eJay Entertainment GmbH?s sales revenue. The maximum consideration payable under all of the above agreements will be EUR 800,000.

The Empire group will be exclusively distributing the eJay product on a worldwide basis. eJay Entertainment GmbH?s sales will be principally in the form of royalties based on EI Europe?s and EI Inc?s sales. In addition, EI Europe will have an option to acquire the shares of eJay AG?s French and British distribution subsidiaries either directly or indirectly through a subsidiary for a nominal consideration of EUR 2.

A major benefit for Empire will come from leveraging its existing publishing and distribution structure over eJay?s product line. There is a close intersection between the music software application market and the computer games business, and yet the product ranges of Empire and eJay complement rather than compete with each other.

An eJay-branded application is currently being developed for the PS2 and other next-generation consoles, with the first product expected to be complete before the middle of 2002. These platforms have advanced music generating potential, with multi-channel and surround sound capabilities that are ideal for music products that are entertaining to use. In the future Empire plans to create a new range of products with eJay that bring the fields of music generation and entertainment software closer together.


Ian Higgins, Chief Executive of Empire Interactive, plc, commented: ?I am delighted to announce this acquisition. There are immense synergies between eJay?s future product path and Empire?s core entertainment software business. Computer games and music are all about entertainment, and so for us this is an extremely exciting development.

?The eJay franchise works in all markets and on all platforms and we believe offers stable, repeatable revenue for the Company. This reflects the Group?s strategy of acquiring and building global brands which we believe can generate revenue every year.?