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Monday, November 30, 2020

Take-Two seeks to buy UK video-game company Codemasters for $974 million

Codemasters is best known for the Colin McRae and official Formula 1 racing games, and has seen its shares soar more than 68% for the year to date.

By: Bloomberg | Updated: November 8, 2020 11:11:18 am
take two, codemasters, take two take over codemasters, codemasters selling, codemasters formula 1, codemasters dirt 5 Analysts expect Codemasters to report fiscal 2021 sales of about 120 million pounds ($158 million) (Image: Codemasters/Dirt 5)

Take-Two Interactive Software Inc., the company behind popular video games like Grand Theft Auto and NBA 2K, offered to buy the British game developer Codemasters Group Holdings Plc for about $974 million.

Codemasters, based in Southam, England, said Friday its board will recommend shareholders accept the cash-and-stock proposal if Take-Two proceeds with a formal bid. The offer values Codemasters at 485 pence per share, the company said, or about 739 million pounds. Take-Two confirmed the terms in its own statement.

Codemasters is best known for the Colin McRae and official Formula 1 racing games, and has seen its shares soar more than 68% for the year to date. Similar to others in the industry, it’s been benefiting from a surge in video-game sales to customers stuck at home during lockdowns. The company plans to release its financial results for the six months through the end of September on Nov. 23.

“Take-Two believes that the combination of Take-Two and Codemasters would bring together two world-class interactive entertainment portfolios, with a highly complementary fit between Take-Two’s 2K publishing label and Codemasters in the racing genre,” Take-Two said in the statement.

The offer represents a 2.6% premium to Codemasters’ closing share price after the stock rose 8.6% in London trading on Friday ahead of the announcement, its biggest gain since April. The company said it made the announcement confirming discussions with Take Two in response to “media speculation.”

Contingent Bid

Take-Two said its offer is contingent on completion of due diligence, among other things, and that it could lower the price. Analysts expect Codemasters to report fiscal 2021 sales of about 120 million pounds ($158 million). Take-Two’s 2021 sales are expected to total $3.13 billion.

Take-Two posted results that exceeded expectations on Thursday, buoyed by sales of the popular NBA 2K and Grand Theft Auto video games. It also issued an upbeat outlook for the year.

Its shares rose as much as 6.4% to $179.46 in New York.

“It is clear the world has started to return to normal in the last few months; if anything, we saw further engagement with our titles,” Chief Executive Officer Strauss Zelnick said in an interview on Thursday.

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