EA races towards takeover of gaming rival Codemasters

US video games giant Electronic Arts (EA) is in pole position to acquire Codemasters in a proposed buyout that has been agreed by the boards of both companies.

Formula 1 game maker Codemasters had been set to sell to New York City-based Take-Two Interactive Software, which made a £725m bid for the British firm in November. But Fifa publisher EA has “gatecrashed” the takeover with a last-minute bid of $1.2bn (£945m), Sky News reports.

Codemasters develops a range of racing games including the F1 franchise, DiRT, DiRT Rally, Grid and Project Cars. The takeover would see these titles join Need for Speed, Burnout, and Real Racing in EA’s portfolio.

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And while that combined line-up does not represent a total monopoly on racing games, it’s “as close as you’re likely to find for any major genre in gaming”, says ARS Technica.

‘Superior offer’

The Codemasters board has withdrawn its recommendation to accept Take-Two’s lower offer in order to “unanimously recommend” taking the bid from EA, Sky News reports. The proposed deal would see Codemasters shareholders receive 604p per share - a premium of 13.1% to the last closing price of the company’s shares.

The takeover is expected to be completed in the first quarter of 2021.

In a statement confirming the offer, Codemasters said: “The EA offer price of 604 pence per share in cash represents an aggregate value of £945m for Codemasters’ issued and to be issued share capital.

“In evaluating the EA offer, the Codemasters board has considered various aspects of the EA offer and considers the EA offer to represent a superior offer for Codemasters’ shareholders as compared with the Take-Two offer.”

Boom time

With people worldwide stuck at home as a result of Covid outbreaks, the video game sector has been “one of the largest winners of the pandemic” as the industry’s sales “boom”, says gamesindustry.biz.

Thanks to new titles and the strength of its back catalogue, Codemasters saw its first-half revenues double in 2020, and the group’s year-on-year sales increased to £80.5m in the six months to the end of September.

F1 2020 was “especially well-liked” by gamers, reaching the No.1 spot in the UK physical games charts in July, in the “best opening week in three years” for the series, This is Money reports.