Electronic Arts $1.2 billion bid beats Take-Two for Codemasters

Video games maker Electronic Arts confirmed on Monday it had reached an agreement to buy Codemasters in a deal worth $1.2 billion

This trumping an earlier agreement between the British company and rival Take-Two Interactive Software. As a result, shares in London-listed Codemasters surged 18.7% to 637.84 pence by 0845 GMT – above the 604 pence per share offered to the company’s shareholders by EA.

UK-based Codemasters, known for its Formula 1 games for Playstation 4, said it considered the new offer to be superior to Take-Two’s cash-and-stock buyout offer of 485 pence per share.

Take-Two said it was considering its position.

California-based EA, as well as rivals Activision Blizzard Inc and Take-Two, have benefited from a surge in videogame sales in the United States fuelled by the trend of people spending more time indoors due to the COVID-19 pandemic.

But that trend could reverse next year as countries begin vaccinating people against COVID-19.

“With the full leverage of EA’s technology, platform expertise, and global reach, this combination will allow us to grow our existing franchises and deliver more industry-defining racing experiences,” EA Chief Executive Officer Andrew Wilson said.

EA’s offer represents a premium of 13.1% to the last closing price of the company’s shares and it expects the deal to be completed in the first quarter of calendar 2021.

“We think Codemasters is an attractive asset with a lot of the qualities a consolidator might look for… It also has a strategic relationship with Chinese operator NetEase, offering a direct route in the lucrative Chinese market,” Citi analysts said.

EA, maker of The Sims, Need for Speed and FIFA, said it expects the deal to grow net bookings and underlying profitability.

UBS Investment Bank is acting as financial adviser to Electronic Arts, while Jefferies is the financial adviser for Codemasters.

What the #simracing community are saying:

Ermin Hamidovic: “Electronic Arts has signed a deal to purchase Codemasters for $1.2 billion, along with ALL of its properties, including Formula 1, Dirt, GRID & Project CARS. We explore the major repercussions for racing games as a whole.”

Aarava: “EA now set to buy Codemasters for $1.2 BILLION ! How will this affect future Formula 1 Games?! What will F1 2021 look like now? F1 2022 & Beyond!”

RandomCallsign: “Most recent sim gossip news. Electronic Arts ( EA ) buys up Codemasters and likely everything that they are made of. You wouldn’t believe what happens next.”