SAN FRANCISCO (Thomson Financial) - Infogrames Entertainment S.A. has agreed to acquire Atari Inc. for $11 million, the companies said late Wednesday.

Lyon, France-based Infogrames is currently the majority shareholder in Atari, holding 51.4%.

Under the terms of the agreement, Infogrames will acquire the remaining outstanding equity interests of Atari for $1.68 a share, equivalent to a cash payment of $11 million.

Following the merger, Atari will be a wholly-owned subsidiary of Infogrames.

The deal is expected to close in the third calendar quarter of 2008.

In connection with the transaction, Infogrames has committed to lend Atari $20 million, which will be used to fund Atari's operational cash requirements during the period between the date of the merger agreement and its closing.

Shares of Atari, the New York-based video game company, closed at $1.54.