Well, the rumors had been getting stronger last week, and now it's official: as per this story on CNet, Microsoft will announce later today that it has acquired Bungie at undisclosed terms (thanks rdr). Daily Radar has more details on the deal, which also involves Take 2 who owned a 19.9 percent stake in Bungie, as well as an interview with Bungie co-founder Jason Jones. Update: here is a copy of the full press release (thanks LancersReactor) with an excerpt of the main paragraphs:

REDMOND, Wash. - June 19, 2000 - Microsoft Corp. today announced it acquired Chicago-based Bungie Software Products Corp., a leading independent developer of action oriented computer and video games. As a result of this acquisition, Microsoft gains exclusive publishing and distribution rights to select Bungie-developed titles, including the highly anticipated sci-fi action epic "Halo."

"This acquisition reflects our commitment to growing our business with a strong portfolio of quality games for the PC and Xbox platforms," said Ed Fries, vice president of games publishing at Microsoft. "Bungie's highly talented team consistently delivers award-winning games, and we're looking forward to supporting their creative spirit here at Microsoft."

Bungie's development staff will become an independent development studio within the Microsoft Game Division, where it will retain its unique character and edgy personality. Microsoft expects the Bungie team to play a key role in the development of content for the Xbox platform, creating the kinds of innovative technology that have defined its character. The team will also continue developing titles such as "Halo," a revolutionary action game recently nominated for four E3 Game Critics awards, including Best of Show.

"This is an opportunity to combine the strength of two outstanding software companies: Bungie's talent for creating great games and Microsoft's strength in distribution," said Alexander Seropian, founder and CEO of Bungie Software Products. "Microsoft will provide us with the resources and infrastructure we need to continue to build great games and make them available on a worldwide scale. We are also looking forward to helping define the Xbox platform, which may soon be the world's premier game console."