3DO Collects Shares Owned by Matsushita

Following the announcement on Tuesday of 3DO's intention to spend up to US$5 million to reacquire outstanding stock, the company announced Wednesday that it has received 3.2 million shares (11 percent of all outstanding shares) of its own common stock from Matsushita in exchange for the termination of certain rights originally granted to 3DO with respect to its M2 technology.

This move entirely divorces 3DO from the hardware business. The binding agreement with Matsushita follows the recent closing of a $20 million cash deal with Samsung concerning the sale of its hardware business.

3DO licensed its M2 technology to Matsushita in 1995. However, Matsushita announced earlier this month that it has ceased further development of the technology for a future gaming system. Under the agreement, 3DO will relinquish its rights to develop and distribute M2-compatible software and peripherals, and also its rights to collect royalties on the use of the technology.

Regarding Matsushita's future plans for the M2 technology it purchased from 3DO - for a sum that reportedly was $100 million - a Panasonic spokesperson recently released the following statement to GS News: "Matsushita Electric Industrial Co. Ltd. continues to develop software and hardware for the 64-bit M2 system. It is not true that we have withdrawn from this project. At present, however, MEICL does not have any plans to use the M2 technology for a home game product."