INFOGRAMES SETS SIGHTS
ON EIDOS PLC
Copyright 2000 www.tombraiderchronicles.com
[ July 23rd 2000 ]
Infogrames
Entertainment, the French software group, is pressing
ahead with plans to acquire UK computer games group
Eidos despite the sharp fall in Infogrames' share price
after news of the proposals leaked two weeks ago. A
deal expected to value the creator of virtual cyber-heroine
Lara Croft at up to £700m ($1.06bn) has reached
the final stages of talks and could be completed within
weeks, though it could still fall through over valuation
and management issues. Other software groups, including
Ubi Soft, have approached Eidos.
Infogrames
is understood to have offered an all-share deal, valuing
Eidos shares at between 600p and 700p. Eidos shares
closed at 491p on Friday, valuing the loss-making company
at £512m, while shares in Infogrames closed at
E26.20. Infogrames recently raised E350m for acquisitions
via a convertible bond issue. The bond was underwritten
by Lazard, Infogrames' advisers, JP Morgan and Societe
Generale.
The Eidos acquisition
would be Infogrames' largest. Charles Cornwall, Eidos
chief executive and founder, will now seek to persuade
institutions that the deal makes sense. A combined Infogrames
and Eidos would be Europe's biggest computer software
publishing company, with annual turnover of more than
£1bn.
The two companies
are expected to argue that a merger would allow cost
savings of between £50m and £100m. Most
would come from cutting staff in areas of overlap. One
adviser close to the transaction said: "A merger between
Infogrames and Eidos could provide a retailer with the
entire games remit both in the UK and the US." Mr Cornwall
is not expected to stay with the merged company, according
to people close to the transaction.
Day-to-day
responsibilities would be passed to Jeremy Heath-Smith,
Eidos's head of development. Mr Heath-Smith was paid
a bonus of £4m linked to the completion of the
latest version of Tomb Raider, the Lara Croft game,
which was released at Christmas. Insiders are now indicating
that a similar bonus-related scheme is being worked
out as part of Infogrames' takeover offer. Eidos is
advised by Dresdner Kleinwort Benson and Morgan Stanley
Dean Witter.
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