Eidos backs rival takeover bid
Computer games maker Eidos switched takeover partners today after supporting a higher approach from rival firm Sci Entertainment.
Financially-troubled Eidos – home to cyberbabe Lara Croft – accepted a £71m (€103m) offer from private equity firm Elevation in March before later receiving a counter approach from smaller counterpart Sci.
With that proposal attracting the support of 41% of shareholders and its value topping £100m (€145m) last night, Eidos said it had now given its backing to Sci.
It will have to pay Elevation, which counts U2 frontman Bono among its directors, a break fee of around £700,000 (€1m) if the Sci offer is successful.
Backing the new offer, Eidos pointed out a “number of key issues” that it said some shareholders may want to consider when voting on the Sci proposal.
They included the fact that a combination of Eidos and Sci will not result in a significantly larger business within an industry that it said required scale to compete effectively. It said there was also the challenge of integrating the two businesses and the retention and motivation of key Eidos employees.
Eidos said: “Shareholders who do not wish to be exposed to such risks, or the potential volatility in the Sci share price, may wish to consider selling their shares for cash in the market.”
Best known for the Tomb Raider series, Eidos fell into the red by £29m (€42.2m) in the final six months of 2004 while uncertainty over its future led to a number of key members of staff quitting.
The group needed a takeover offer to be made by Good Friday to secure £23m (€33.4m) in short-term funds from the Royal Bank of Scotland.
Elevation, which was formed last year to invest in the media and entertainment industries, offered 50p per share to take Eidos private and free it from “the burden of half-yearly reporting”.
In contrast, Sci Entertainment is offering investors one new Sci share for every six of their shares in Eidos.
Sci chief executive Jane Cavanagh said: “We firmly believe that our offer is in the best interests of both Sci and Eidos shareholders and Eidos employees. The prospects for the enlarged group are very positive.”
SCi, which has released hit computer games such as the Combat series, The Italian Job and The Great Escape, believes its rival could benefit from its strategy of outsourcing the development of games.
