Electronic Arts to buy British video game developer Codemasters for £900 million

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Dec 14, 2020
  • Electronic Arts to buy British video game developer Codemasters for £900 million.
  • The agreement offers 604 pence per share to Codemasters' shareholders.
  • Take-Two Interactive had offered a lower 485 pence per share in its offer last month.

In an announcement on Monday, Electronic Arts Inc. (NASDAQ: EA) said it will buy, Codemasters (LON: CDM), for £900 million. The British video game developer had previously struck an agreement with Take-Two Interactive Software – a bid that EA successfully trumped on Monday.

At £102 per share, Electronic Arts Inc. is currently close to 30% up year to date in the stock market after recovering from a low of £64.86 per share in March, when the COVID-19 crisis wreaked havoc on the financial markets – a good news for value investors.

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

EA performed largely upbeat in the stock market last year with an annual gain of roughly 30%. At the time of writing, it is valued at £29.39 billion and has a price to earnings ratio of 30.25.

Codemasters’ shareholders to get 604 pence per share

As per the agreement, shareholders of Codemasters Group Holdings plc will get 604 pence per share that translates to a premium of 13.1% on the price at which its stock closed the regular session on Friday.

Neil Campling of Mirabaud Securities commented on the news and said:

“In some respects, EA’s move feels defensive, because they are already under attack from Take-Two, and many of their franchises are becoming second rate relative to leaders.”

In comparison, Take-Two Interactive had offered a lower 485 pence per share to the shareholders last month. The American video game holding company said in a brief statement on Monday:

“Take-Two is considering its position in relation to Codemasters, and a further announcement will be made when appropriate.”

In separate news from the United Kingdom, Rolls Royce said on Monday that it had kicked off search for a successor to Chairman Ian Davis, months after its CFO Stephen Daintith had announced his resignation in August.

Codemasters jumped a little under 20% in premarket trading

Codemasters is broadly known for its Formula One games that are exclusively available on PlayStation 4. The company’s board said on Monday that EA’s proposal was significantly superior as compared to the previous offer from Take-Two Interactive in November.

Codemasters opened a little under 20% up on Monday and gained another 2% in the next hour. On a year-to-date basis, its shares are now more than 125% up in the stock market. At the time of writing, the British video game developer has a market cap of £988 million and a price to earnings ratio of 46.46.

Invest in crypto, stocks, ETFs & more in minutes with our preferred broker, eToro
10/10
67% of retail CFD accounts lose money