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Electronic Arts said it had struck a deal to buy Codemasters in a deal worth $ 1.2 billion (roughly Rs. 8.8 billion rupees), beating an earlier deal between the British company and rival Take-Two Interactive.
Shares in London-listed Codemasters rose 18.7 percent to £ 6.37 (roughly Rs 600) as of 08:45 GMT (2:15 pm IST) above £ 6.04. (approximately Rs 580) per share offered to company shareholders by EA.
UK-based Codemasters, known for its Formula One games for Playstation 4, said it considered the new offer to be superior to Take-Two’s cash and stock offer of GBP 4.85 (roughly Rs. 470 ) per share.
Take-Two said he was considering his position.
California-based EA, as well as rivals Activision Blizzard and Take-Two, have benefited from a surge in video game sales in the United States driven by the trend for people to spend more time indoors due to the pandemic. of COVID-19.
But that trend could be reversed next year when 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 career experiences,” said Andrew Wilson, CEO of EA.
EA’s offering represents a 13.1 percent premium over the company’s latest closing price for the company’s stock and expects the deal to be completed in the first calendar quarter 2021.
“We believe that Codemasters is an attractive asset with many of the qualities that a consolidator could look for … It also has a strategic relationship with the Chinese operator NetEase, which offers a direct route into the lucrative Chinese market,” Citi analysts said.
EA, maker of The Sims, Need for Speed and FIFA, said it expects the deal to increase net bookings and underlying profitability.
UBS Investment Bank acts as the financial advisor to Electronic Arts, while Jefferies is the financial advisor to Codemasters.
© Thomson Reuters 2020
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