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.