Club Penguin, a Kelowna-based children’s virtual world website with more than 12 million activated users, has been bought by Walt Disney Co. in a deal worth $700 million US. According to terms of the deal, $350 million US will be paid in cash, but the website’s founders — Kelowna tech entrepreneurs Lane Merrifield, Lance Priebe and Dave Krysko — can make up to $350 million US more depending on the site’s earnings in 2008 and 2009. The website, which retains its URL,, will now be called Disney’s Club Penguin and remain in Kelowna, where its 130 workers are based. Merrifield, Krysko and Priebe will continue as managers of the unit, with Merrifield becoming executive vice-president of the Walt Disney Internet Group. Disney says it has no plans to change the site. “We are not going to do anything that in any way gets in the way of the phenomenal success [Club Penguin] has had,” Steve Wadsworth, president of the Walt Disney Internet Group told reporters in a conference call Wednesday afternoon. That means keeping the site advertisement free and relying on increased subscriptions to bring in revenue, Wadsworth said. Merrifield said Disney’s promise to keep Club Penguin ad free was key to reaching a deal. “For us, the beautiful thing is that Disney came along and said, ‘We love you how you are. We want to keep you how you are. And we want to keep you where you are,'” Merrifield said. Aimed at kids aged six to 14, Club Penguin is a frozen world populated by cartoon penguin avatars. Children create a penguin personality and then play and talk with other kids, earning virtual money they can use within the game. Children can access Club Penguin — launched in October of 2005 — for free, but their play is limited unless they pay the $5.95 monthly fee. Twelve million users have signed up, 700,000 of them as paid subscribers. The site has a range of safety measures, including special chat functions to ensure children’s personal information isn’t put online. The company has also committed a portion of its net profits to charitable causes. Three weeks ago, Club Penguin’s communications director Karen Mason told The Vancouver Sun the company had turned down several buyout offers. But on Wednesday, Merrifield said the company’s vision was outpacing its capabilities, and if it was to grow needed to join forces with a company like Disney. “For us, the value was in what we could do to make the best experience possible for our users,” Merrifield said.