Friday, May 14, 2021

Electronic Arts lines up a counter-offer for Codemasters

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Electronic Arts is preparing to bid for UK-based video game maker Codemasters, tweeting US video game rival Take-Two Interactive, according to people with first-hand knowledge of the situation.

California-based EA’s offer reportedly disrupts planned cash and stock deal agreed between Take-Two and Codemasters last month and is expected to value the UK company at over £ 900million, the people said.

EA’s offer is expected to come with a premium of more than 10% over Codemasters’ London-listed closing price on Friday of 534p.

The offer could be announced as early as Monday; However, these people warned that a leak on Sunday from the British channel Sky News EA’s interest may complicate the move.

EA’s purchase of Codemasters at a valuation greater than $ 1 billion would be the biggest deal the California-based company has ever made, but its move could yet spark a bidding war.

Take-Two, parent of Grand Theft Auto and NBA 2K games, and Codemasters had Okay a cash and stock transaction in early November that initially valued the Warwickshire-based company at around £ 759million ($ 994million).

Although Take-Two’s share price subsequently rose, increasing the value of its bid, certain Codemasters shareholders had expressed frustration that the 34-year-old games company had accepted only a modest premium over its previous trading levels.

A deal with EA would unite the publisher’s formidable Silicon Valley sports games stable, including the FIFA football and American Madden football franchises, with racing simulators from Codemasters. EA is one of the biggest video game companies, valued at nearly $ 40 billion, and it is the strongest in the PC and console markets where Codemasters has also focused.

Battle for Codemasters follows year of gaming industry negotiations capped by Microsoft $ 7.5 billion plan to acquire ZeniMax, as the pandemic has drawn record audiences to console and mobile games.

Console makers like Sony and Microsoft, as well as internet groups like Google and Amazon that launched cloud gaming services Over the past year, they have fought for exclusive content rights in order to win players over to their platforms.

Sports games have proven to be particularly attractive during coronavirus-induced lockdowns, as traditional leagues have been unable to play or have been forced to do so behind closed doors. This has accelerated the dynamics of competitive play, with Formula 1 racing hosting its own professional esports tournament based on Codemasters software.

EA and Codemasters both declined to comment on the threads.

In a note to customers on Sunday night, analysts at Mirabaud noted that EA’s offer came as Codemasters was riding the back of good reviews for its latest racing game, F1 2020.

“In some ways, EA’s move seems defensive, as they are already under attack by Take-Two and a lot of their franchises are becoming second-rate to executives,” wrote Neil Campling, head of TMT research at Mirabaud.

“If EA bids, I think [Take-Two] may counter with a higher bid due to Codemasters ‘long term strategic value’ [intellectual property] and technology. “

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