Electronic Arts announced today that it has purchased the holding company that owns BioWare and Pandemic Studios.

The acquisition will cost EA about $775 million, which includes a $650 million cash payment to the stockholders of VG Holding Corp., which directly owns the two developers, and an additional $155 million in equity to select VG employees.

As part of the agreement, EA said it plans to lend up to $35 million to the company through the closing of the deal, expected in January. EA will also assume outstanding VG Holding Corp. stock options.

VG Holding is owned by Elevation Partners, which invested $300 million in BioWare and Pandemic in November 2005, creating one of the world's best-funded and largest independent game development houses.

Elevation Partners (which includes U2 front-man Bono) was formerly headed by John Riccitello, who left EA in 2004 to form the company. Riccitello re-joined EA as chief operating officer in April.

"We are truly excited by John Riccitiello's new vision for EA," said Ray Muzyka, Co-founder and CEO of BioWare Corp. in a news release Thursday. "This vision is consistent with BioWare's focus on crafting the highest quality story-driven games in the world. It will enable us to further the careers of the passionate, creative and hard working teams at BioWare Edmonton and BioWare Austin."

Pandemic Studios is led by Andrew Goldman, Josh Resnick and Greg Borrud. BioWare Corp. is jointly led by Greg Zeschuk and Muzyka. Those teams will join the EA Games Label run by Frank Gibeau, President of EA Games.

BioWare's upcoming RPG Mass Effect is scheduled for a November 20 release. Pandemic Studios is currently working on Mercenaries 2: World in Flames, expected to be released in April.