A bid battle for British video game maker Eidos Plc erupted on Tuesday after SCI Entertainment
trumped an earlier agreed takeover of Eidos with a 76 million pound ($144 million) counteroffer.
Eidos shares surged some 25 percent on the bid, which topped one by U.S. private equity company Elevation Partners LP, which counts U2 rock star Bono among its partners.
Video game publisher SCI is offering one of its shares for every six shares in Eidos, which is best known for its “Tomb Raider” games featuring Lara Croft.
SCI said its offer valued each Eidos share at 53.6 pence, higher than the cash bid from Elevation, which valued Eidos at 50 pence a share.
Eidos said it would try and hold talks with both SCI and Elevation as it weighed up the rival offers.
“We will explore conversation opportunities with all relevant parties in order to find the best outcome,” Eidos Chief Executive Mike McGarvey told Reuters.
He added that Eidos would have to consider carefully the all-share element of SCI’s offer.
“The board will need to understand the rationale behind the paper offer. SCI is a different company; it’s a much smaller company,” he said.
Elevation Partners declined to comment on the SCI offer.
Eidos shares closed up 27.9 percent at 57-1/4 pence, suggesting investors think the battle has further to run.
Shares in SCI, which is raising around 60 million pounds in a placing and open offer to help fund its bid, finished up 3.7 percent at 333 pence. The placing and open offer are fully underwritten by KBC Peel Hunt and priced at 300p a share.
Schroders, which owns more than 20 percent of Eidos stock, said it would back the SCI bid.
“We had suffered as Eidos shareholders, and we feel that under a new management team, we could get some value back,” said Schroders fund manager Andy Brough.
Eidos has recently racked up losses amid poor sales of computer games and delays to new ones.
Eidos CEO McGarvey denied the board was under pressure to accept SCI’s offer in the wake of Schroders’ decision.
“It doesn’t put pressure on us. We have a fiduciary duty for all shareholders, not just one,” he said.
SCI said acquiring Eidos would enhance earnings in the first full year of ownership. SCI Chief Executive Jane Cavanagh said Eidos’s recent financial woes had “not done justice” to the strength of its brand name.
UBS is advising Eidos, while Lehman Brothers is working for Elevation Partners.
