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Innovation & Design

id Software Rejected Activision Takeover Bid

It's likely that Activision and Doom developer id Software never wanted this sort of information to go public, but thanks to an article in The Wall Street Journal, which cites recent court documents, we now have some insight into the dirty politics that resulted in the "retirement" of id co-founder Adrian Carmack, and we have details on what could have been a blockbuster deal in the video game industry last year.

Failed id bid

According to the Journal, a suit filed by Adrian Carmack, a partial id owner, revealed that last fall Activision, the second largest independent video game publisher behind only EA, bid $90 million for three of id's coveted properties: Doom, Quake and Wolfenstein. The publisher also strongly considered purchasing all of id in a takeover worth $105 million. However, nothing ever came of it because talks broke off in October 2004, after id's four other owners rejected the offers as too low.

Dirty dealings

Perhaps more interesting than the failed buyout of id, however, is the contentious relationship between id's five owners. Prior to this WSJ report, it was thought that Adrian Carmack had decided to step away from id on his own terms, but Carmack claims that he was actually squeezed out and made to quit his position as a director and artist at the studio earlier this year because he refused a buyout offer of $20 million. Carmack is seeking to have his employment contract declared invalid.

"Papers filed in a suit asking the court to void Mr. Carmack's employment contract reveal a messy squabble among the five highly-paid owners. Mr. Carmack, who was fired as an employee and director earlier this year, claims that executives tracked the hours he worked at the company, refused him access to board documents, and last year halted a long-standing practice of paying out profits in dividends so he would receive less than other directors," states the WSJ article.

"Mr. Carmack claims the decision not to sell the company was part of an effort to force him to sell his shares back at a fraction of what he would have made in a sale to Activision. Under terms of a contract he has asked the court to void, Mr. Carmack would have to sell his 41% stake in the company for $11 million, below the $40 million he might have reaped from Activision," the report continues.

Independent and liking it

The 14-year-old id Software has resisted potential suitors for years in order to remain independent. The developer is also quite wealthy for a small company, which is not very surprising given the popularity of its franchises and all the graphics software it licenses to other companies. Court documents showed that last year, id had a net income of $10.5 million on revenues of $30.5 million, and Adrian Carmack and co-founder John D. Carmack were paid about $3.5 million a year between 1998 and 2003. (In case you were wondering, the two Carmacks are not related—what are the odds that two people named Carmack who are unrelated would found a company together?)

id is currently supervising the development of Quake 4, which is being handled by Raven Software. The game is expected to ship during this holiday season for PC and Xbox 360.

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