Video game company Infogrames has agreed a deal to acquire Atari for $11m.

Infogrames originally made the offer in March, setting a deadline of 11 March for Atari to make a decision about the proposal.

Atari has faced delisting from the Nasdaq exchange several times in recent months, and had requested that the deadline be extended. The firm has now agreed to the offer.

Infogrames, which is already Atari's largest stockholder, will purchase all outstanding shares to make Atari a wholly-owned subsidiary.

The company will also lend Atari $20m to help fund operations until the merger is complete.

"This is a key strategic event for Infogrames that will benefit all our shareholders. I believe that this transaction will generate significant benefits for the group," said David Gardner, chief executive at Infogrames.

"Bringing Atari US and Infogrames together will create a simplified global structure for our business as we seek to rebuild a well-managed, cohesive and financially disciplined company."

Infogrames has also recently made a bid for beleaguered video game maker SCi, which lost three top employees in January and recently cut 25 per cent of its staff as part of a radical restructuring. The offer was rejected by the SCi board.