Seeking to bolster its online presence among kids, Walt Disney
Co. is expected to announce it is buying Club Penguin for $350 million in cash, according to people familiar with the situation.
Disney, which is announcing fiscal third quarter results today, has agreed to pay up to another $350 million to Club Penguin's founders if the company reaches certain performance targets through 2009, the people said.
Founded in late 2005, Club Penguin offers kids the ability to customize their own virtual penguin. Penguins chat with other virtual penguins, play games and earn currency to buy accessories.
Club Penguin's founders will continue to run the site out of their headquarters in Kelowna in British Columbia, Canada, people familiar with the situation said. The site will be renamed "Disney's Club Penguin."
The acquisition is Disney's first in the virtual world and social networking arena. Disney has sat on the sidelines in the past couple of years as rival media companies snapped up online properties. The Burbank, Calif.-based company has preferred to take an in-house approach to building its Internet presence. In a key move earlier this year, it re-launched its core disney.com site