The Electronic Arts deal with Codemasters involves a whopping amount of around $1.2 billion which outweighs the $973.01 million offered by Take-Two.
Electronic Arts Inc (NASDAQ: EA) has submitted a knockout offer and reached an agreement with Codemasters Group Holdings Plc (LON: CDM) in a deal worth $1.2 billion according to multiple reports. Codemasters, the developer of racing games including Dirt 5, the Grid Franchise, and others had previously reached an agreement with the Take-Two Interactive Software for the takeover. However, some of their fund managers expressed their dissatisfaction with the deal due to its equity component as claimed by the report. The initial offer proposed by the Take-Two included both cash and share. This means the stock price was to determine the value of its proposal.
What the Deal with Codemasters Entails
Codemasters shareholders would have received about 485 pence per share under the deal offered by the Take-Two. Interestingly, the deal with Electronic Arts will see them receiving around 604 pence per share. Also, the Electronic Arts deal with Codemasters involves a whopping amount of around $1.2 billion which outweighs the $973.01 million offered by Take-Two.
Electronic Arts is a very popular game developer with a market cap of $40 billion while Take-Two has a market cap half the value of Electronic Arts. Currently, it is unclear whether the Take-Two will come out with a counter offer.
Gerhard Florin, the Chairman of Codemasters has expressed his excitement about the deal stating that the two companies have a similar interest in taking the racing game category to a new height.
“The Board of Codemasters firmly believes the company would benefit from EA’s knowledge, resources, and extensive global scale,” he said.
Electronic Arts Acquisitions
Electronic Arts have actively been acquiring companies to expand their business and add new product lines. Interestingly, they have over 40 acquired companies spread across Europe with the company revealing that they sometimes get calls from people who want to offer their companies for sale.
The likes of VG Holding Corp. Mobile Post Production, and Chillingo were all acquired by Electronic Arts. Blake Jorgensen, the COO of Electronic Arts hinted that it is rare to not get the chance to check out anything that is put on sale. According to him, they have had good relationships with people and are always ready to buy great talents and great games.
The recorded revenue of the gaming company has been a reflection of the constant addition of new products that come from its company acquisition strategy. In 2018, Electronic Arts recorded $5.15 billion as annual revenue which is a 6.3% increase from the 2017 revenue. In 2019, the company recorded $4.95 billion which was a decline of 3.88% from the previous year. The annual revenue for 2020 is $5.537 billion. This is an 11.86% increase from the previous year. Electronic Arts have benefitted from the expansion of its business and the diversity of its games over the years.
Excellent John K. Kumi is a cryptocurrency and fintech enthusiast, operations manager of a fintech platform, writer, researcher, and a huge fan of creative writing. With an Economics background, he finds much interest in the invisible factors that causes price change in anything measured with valuation. He has been in the crypto/blockchain space in the last five (5) years. He mostly watches football highlights and movies in his free time.
