Under the terms of the agreement, Flipside will buy Uproar's outstanding stock for $3 per share in its effort to make one of the largest online-gaming networks, the companies said in a joint statement.
Although both executive boards have signed off on the transaction, government regulators have yet to approve the merger.
As Flipside, Uproar and rivals such as Pogo.com have drawn on the popularity of online gaming, Web companies that rely on advertising revenues have hit hard times. Net giant Yahoo is among those facing substantially lowered expectations for 2001.
Even Flipside recently closed offices in Seattle and laid off 39 employees. Its executives said at the time that the cuts would allow the company to focus on its core business.
Despite these woes, Vivendi, Flipside's parent company, says the time is right to merge the two companies.
"Current market conditions have made it possible for us to make this strategic acquisition and, with the combined company, create immediate value for the shareholders of both Vivendi Universal and Uproar," Agnes Touraine, chief executive of Vivendi, said in a statement.
The merger follows a series of moves to bulk up Flipside's service. In August, the company partnered with America Online to produce games that can be played over the ICQ instant messaging service. In January, it created a series of e-mail games.
With Tuesday's announcement, Flipside and Uproar said the combined company is expected to make $70 million in revenues in 2001. The new company will be an international gaming network reaching audiences in the United States, the United Kingdom and France.
Flipside formed in March 2000 from the merger of online game sites Won.net and PrizeCentral.com. It draws revenues from advertising and entices viewers by offering cash and prizes.