By GARY MCWILLIAMS
Staff Reporter of THE WALL STREET JOURNAL
September 27, 2005 4:04 p.m.
HOUSTON -- Id Software Inc., the closely-held developer of the Doom and Quake computer games, last year rejected a $90 million offer from videogame publisher Activision Inc. for its three most popular programs, according to a suit filed by a co-founder of the Mesquite, Texas, developer.
The suit, by id Software computer artist and co-founder Adrian Carmack, claims Santa Monica, Calif.-based Activision last fall bid $90 million for its Doom, Quake and Wolfenstein game programs and considered paying $105 million for the entire company. The talks ended in October, 2004, after Id's four other owners rejected the offers as too low, according to court documents.
Todd Hollenshead, chief executive officer of 14-year-old id Software, was unavailable to comment, a spokeswoman said. William Chardavoyne, Activision's executive vice president and chief financial officer, didn't respond to messages left at his office. Activision, the second largest independent videogame publisher after Electronic Arts Inc., had $1.4 billion in revenue last year.
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.
The court documents provide an unusual glimpse into the small but very profitable company. Last year, id Software earned $10.5 million on revenues of $30.5 million, according to financial statements filed with the court. Mr. Carmack and co-founder John D. Carmack, who are unrelated, were paid about $3.5 million a year between 1998 and 2003.
Id's wealth stems from its first-person shooter games. The company sells about 15 different programs in addition to the better known Doom, Quake and Return to Castle Wolfenstein programs, and licenses its graphics software to other game developers.
Adrian 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.
In a filing earlier this month, he claims the other owners fired him after he refused an offer to be bought out for $20 million. The Activision offer was revealed by a filing by Mr. Carmack seeking to have his employment contract declared invalid. He contends Id's other owners rejected the Activision offer so they could acquire his shares as a price below what they might later fetch.
