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TOKYO -- Namco Bandai Games Europe is laying out $46.7 million for a 34% stake in the European and Asian distribution units of Gallic vidgame company Infogrames Entertainment, which owns Atari Europe.

Under the terms of the transaction, Infogrames will regroup the units into a stand-alone company with exclusive physical distribution rights for Namco Bandai and Infogrames games in Europe and Asia.

Infogrames has an option to sell the outstanding 66% in the new entity to Namco Bandai until June 30, 2012. After that, Namco Bandai has a year to exercise an option to buy the stake.

The primary object of the deal is to strengthen Namco Bandai's sales presence in the rapidly expanding European market.

Both sides intend to hammer out the details of the deal, including the exact amount and percentage of investment, by the end of February.

Atari Europe sells games in 20 countries in Europe. Sales for 2007 amounted to $280 million.