GT purchase of Virgin Interactive falls through

GT Interactive's bid to acquire Virgin Interactive from Viacom has crashed, despite claims that the deal had been completed.

Games specialist GT Interactive was the latest suitor to attempt to purchase Virgin following a failed buyout attempt by Electronic Arts last year.

Viacom's decision to spin off its games arm has left Virgin Interactive in a state of limbo for over a year. This latest fall-through has compounded Viacom's failure to complete a deal and guarantee Virgin's future.

While the reasons for the deal's collapse remained unclear, sources suggested that GT had found negotiations with Viacom increasingly frustrating.

A representative at Virgin Interactive revealed: 'It's all on hold. There was a lot of speculation at the E3 Show but GT Interactive has pulled out. There were a few last minute disagreements. We are used to it now.

It's been going on for about 18 months.'

She added that there was still interest in the company. Sources have claimed that Sony was tipped as a possible suitor.

Paul Fox, head of communications at GT Interactive, added: 'We are not ready to make an announcement. It's been going on for months, it's an ongoing saga.'

Nick Gibson, analyst at Durlacher Research, commented: 'It's a pity.

It could be down to hiccups with the due diligence process or a relationship problem with the lawyers, or it could be that someone wants to break up the group.

'Ninety per cent of Virgin's value is Westwood Studios - it really is the jewel in the crown. That is a key strength, but it also has important relationships with Lucas Arts and Capcom. GT would need to retain those relationships.'

Viacom paid #230 million for Virgin Interactive in 1993. Viacom reported revenue of $3.1 billion for the first quarter of this year ended 31 March.