29 Oct

Earlier this week, Ed Fries, a former Microsoft employee, discussed the acquisition of Rare by his ex-employers with Develop. What wasn’t known about the situation was how hard Microsoft had to fight to acquire it. A bidding war had reportedly been fought between Microsoft, Nintendo, and Activision, the latter remaining the strongest contender until internal politics disrupted the negotiations. The ultimate victor was Microsoft with a $375 million bid, the price inflated due to Nintendo’s prior hold in the company assets.

“There was a bit of a bidding war between us [Microsoft] and Activision – a war which they had won at first,” Fries says. “They made the best initial offer, and Rare looked at both of us and, from the way I saw it, was more interested in partnering with Activision. I think it’s because they wanted to be third-party, independent of all platforms.”

“Something happened between them and Activision. I don’t know what it was, but relatively far along in the deal things got cold, and we made a counter offer. Our bid was bigger than Activision’s, but Activision was still in control of the deal at the time. The prices were getting so high, by this point, that it didn’t look like Nintendo was willing to participate,” he explained. “So, very near the end, Activision backed out of the deal, for reasons I still don’t know, and Rare came to us.”

“Nintendo owned half of Rare, and had an option to buy the other half. By the time we started getting interested, that option had passed its deadline and effectively expired, though Nintendo had argued for a temporary extension, which they got,” he said. “That extension began to expire again, and by that point us and Activision got involved in the conversation to acquire Rare. Still at this point, Nintendo had the priority option to buy the other half of Rare at the price we were offering. So, there’s a problem; if we drive a hard bargain and put in a low price for Rare, Nintendo would have the chance to buy at that low price and probably would. So, the price was high.”