Infogrames bought the Atari name on debt — twelve years later it filed for bankruptcy

Any acquisition financed against the buyer's own valuation: ask what happens when the share falls. Infogrames' bonds were secured on its stock — the day the market stopped believing, financing and strategy died together. Buy the cash flows, not the logo.

Infogrames was founded in Lyon in June 1983 by Bruno Bonnell and Christophe Sapet, and through the 1990s it grew by buying studios and publishers — Ocean, Gremlin, Accolade, GT Interactive, Paradigm, Shiny. By the turn of the century it was the world's number-two video games publisher. On 29 January 2001 it completed the purchase of Hasbro Interactive for $100 million: the games catalogue, MicroProse and its 250 titles, and above all the Atari name. To pay for it, the group issued bonds secured against its own share price.

The purchase put 580 million euros of debt on the group by 2002, and servicing it made every year after a loss year. The share fell from 5,160 euros in June 2000 to 80 cents. The American subsidiary was renamed Atari Inc. in 2003, and in 2009 the parent became Atari SA — the buyer had renamed itself after its purchase. On 5 April 2007 the board pushed out Bonnell, the founder; six chief executives followed him in six years. Revenue slid from 769 million euros in 2001–02 to 39.6 million by March 2012, staff fell from more than 1,000 to a few dozen, and the market value was 27 million euros.

By late 2012 the parent could not raise the money to repay 21 million dollars due in March 2013. On 21 January 2013 the American subsidiaries filed for Chapter 11 to break away from the French structure, which the filing called a burden; the parent followed with its own filing before the Paris commercial court. On France 3 the next day, the pushed-out founder commented: sad the company would not see thirty, he said, but delighted at the comeuppance of those who ousted him. It emerged from proceedings in December 2013, thirty years after its founding, under the only name left to it: Atari.

€580m of debt by 2002 made every year after a loss, leading to bankruptcy in 2013, thirty years after founding.

The Atari brand was bought with bonds secured against Infogrames' own share price — when the share fell, the debt that bought the name became the debt that crushed the company.

The debt charge alone made every year after 2002 a loss year: revenue could fall from €769m to €39.6m while the bill stayed the same.

The rebrand tied the whole group's fate to the purchased name — when the slide came there was no Infogrames left to restart, only Atari's shadow.

Buying a famous name with debt secured on your own share price mortgages the buyer, not the target. Twelve years on, the name was the only thing that had survived the payment.