US games giant gatecrashes Codemasters deal with £945m bid
The £725m deal to sell computer game maker Codemasters has been gatecrashed by US giant Electronic Arts (EA).
EA has sensationally submitted a last-minute £945m bid that would top the offer agreed in November with Take-Two Interactive Software, which makes the Red Dead game franchise.
Codemasters, based in Leamington Spa and with a Runcorn operation, revealed the bidding war in a trading update to the London Stock Exchange this morning (December 14). It is unclear what the level of EA’s bid is at present.
Codemasters’ shares ended the day at 534p each. Last week it revealed it had doubled its profits and seen a large hike in profits for the six months to September 30.
The firm turned over £80.5m during the period – up from £39.8m last year, while operating profits were up from £12m in 2019 to £20.3m this time around.
EA makes some of the biggest titles in the gaming industry, including the FIFA football series.
Gerhard Florin, chairman of Codemasters, said: “Electronic Arts and Codemasters have a shared ambition to lead the video game racing category.
“The Board of Codemasters firmly believes the company would benefit from EA’s knowledge, resources and extensive global scale – both overall and specifically within the racing sector.
“We feel this union would provide an exciting and prosperous future for Codemasters, allowing our teams to create, launch and service bigger and better games to an extremely passionate audience.”
The Codemasters board has confirmed it has withdrawn its recommendation of the offer made by Take-Two Interactive Software, Inc and that it intends unanimously to recommend the EA Offer.
Russ Mould, investment director at Manchester investment platform, AJ Bell, said: “Gamers have a habit of being able to navigate through difficult levels and they fight to reach higher ground, but investors often don’t have the same patience and perseverance.
“Codemasters’ takeover offer from Take-Two always looked a bit stingey but its shareholders seemed to be losing all hope of someone else coming along with a better offer.
“Many of them will have already exited, preferring to lock in a small gain all in cash rather than wait for a mixture of cash and shares in an overseas-listed business.
“Yet investors who stayed the course have now been given an extra life after Electronic Arts entered the fray with a better offer.
“This is a good result and an all-cash deal, but it’s not the same joyous feeling as finding a Playstation 5 in stock as many people still believe Codemasters is worth a lot more than is being offered.
“Gaming has been one of the industries seeing accelerated take-up during the pandemic and there are quite a few high-quality players on the UK stock market.
“In one way, it would be a shame to see Codemasters delist as it would mean the London Stock Exchange is deprived of yet another quality software business.
“The broader tech space is woefully under-represented among larger UK stocks which means the UK is lagging other markets globally.
“However, the fact that Codemasters is the latest in a string of tech-related businesses to be taken over does show that the UK is still a good hunting ground for smaller tech firms, which means the market still has something to offer in this space.”
