Shares of London-listed Codemasters rose 18.7% to 637.84 pence by 0845 GMT after Electronic Arts (EA) agreed on Monday to acquire it in a deal worth $1.2 billion, according to Electronic Arts press release. The EA, reached an agreement after outbidding an earlier agreement with Take-Two Interactive Software.
- The acquisition of Codemasters will allow EA to leverage its technology, platform expertise, and global reach to grow existing franchises and deliver industry-defining racing experiences
- EA expects the Codemasters deal to grow net bookings and underlying profitability.
- Analysts consider Codemasters an attractive asset to EA and has a strategic relationship with Chinese operator NetEase, offering a direct route to the lucrative Chinese market
- EA’s offer represents a premium of 13.1% to the last closing price of Codemasters and expects the deal to be completed in the first quarter of 2021
- Codemasters is known for its Formula One games for Playstation 4 and considers Electronic Arts superior to Take-Two’s cash and stock buyout offer of 485 pence per share.
- EA, based in California, and rivals, Activision Blizzard Inc and Take-Two, have benefited from a surge in video game sales in the U.S. fueled by more people staying indoors during the pandemic
Codemasters and Electronic Arts stocks are gaining. CDM: LON is up 20.22%, EA: NASDAQ is up 0.79% on premarket.