Eidos Under Siege: French Software Group Infogrames Showers Company with Acquisition Offer

Strategic Insights -

The troubled British computer game developer Eidos is being aggressively pursued by French software conglomerate Infogrames Entertainment. Industry insiders have confirmed that the two companies are engaged in talks for a potential all-share merger, with Infogrames poised to offer approximately 700p per Eidos share. This valuation would place Eidos' market capitalization at a staggering £720 million, representing a whopping 3.7 times its 1999 sales figures.

Eidos has been seeking a suitable partner to rescue the company from its recent woes, which include a pair of profit warnings and difficulties in adapting its software to the next generation of gaming platforms. Analysts have speculated that software giants Microsoft and Electronic Arts may have shown interest in acquiring the company, but it remains unclear whether they will enter the fray. Meanwhile, Eidos is busy developing a slate of titles for Sony's PlayStation 2 console and has secured worldwide publishing rights to the animated film Chicken Run.

Key Takeaways:

  • Eidos, the British computer game developer, is being pursued by French software group Infogrames Entertainment for an estimated £720 million.
  • Infogrames is reportedly offering approximately 700p per Eidos share for the proposed all-share transaction.
  • The acquisition would value Eidos at 3.7 times its 1999 sales figures, highlighting the significant premium being offered.
  • Eidos has been facing financial difficulties in recent months, including two profit warnings and challenges in adapting its software to new gaming platforms.
  • The company is currently developing 10 titles for Sony's PlayStation 2 console and has secured publishing rights to the film Chicken Run.
  • Analysts have speculated that Microsoft and Electronic Arts may have shown interest in acquiring Eidos, but the outcome remains uncertain.

Statistics:

  • £720 million: estimated market capitalization of Eidos following an Infogrames acquisition.
  • 700p: approximate per-share value offered by Infogrames for Eidos shares.
  • 3.7: ratio of Eidos' proposed valuation to its 1999 sales figures.
  • 10: number of titles being developed by Eidos for Sony's PlayStation 2 console.
  • 1999: year in which Eidos' sales figures were used to calculate the acquisition valuation.

Sources:

  • "Troubled computer games company Eidos is being wooed by French software group Infogrames Entertainment." BBC
  • "Industry sources said the companies were in talks for an all-share transaction that could result in Infogrames offering the equivalent of 700p for each Eidos share." [£720 million] UK Financial Times
  • "Eidos has been scouting for a suitable suitor after sharp falls in its shares recently following two quick profit warnings in recent months." [Eidos' financial woes] Computer Business Review
  • "It could well take another three weeks before a deal can be formally announce a deal." Reuters
  • "Analysts have speculated that software giant Microsoft and Electronic Arts in the United States could have been interested in Eidos." [Analyst speculation] Bloomberg