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LARA CROFT FIRM MAY BECOME HUNTED
Copyright 2002 www.ft.com

[ May 13th 2002 ]

Eidos, the UK computer games company renowned for its sultry game heroine Lara Croft, could be the subject of a takeover approach from French rival Ubi Soft, French business paper Les Echos has learnt. "We are certainly going to grow by acquisitions this year," said Yves Guillemot, Ubi Soft executive chairman. "Within that framework, Eidos could be a target for us. Whatever happens, I think that company will be bought in the course of the year."

Shares in Eidos rose 20p, or 14 per cent, to 161p in early trading on Monday. They have fallen 54 per cent this year, reducing its market capitalisation to 195m. The fall has been made worse by the company's announcement in March that sales in the current financial year are likely to be less than 120m, some 12 per cent below predictions. Further, the company said it was set to make an operating loss of 9m.

Ubi Soft, best known for its Rayman character, has meantime seen its shares fall 28 per cent and is capitalised at E522m. Fourth-quarter sales figures, just published, show a 14 per cent increase in revenues to E90.5m, lifting the full year total by 42 per cent to E369m. Brokers expect the company to have earned net profits of E13m.

Bruno Hareng, an analyst at broker ING Barings, said: "This acquisition is not to be ruled out, even if I think that it's a rather too-big target for Ubi Soft. Whatever happens, if Eidos is going to be sold the deal must happen before November 15, when the next Lara Croft game on PlayStation 2 is due to be launched. After that date, with help from sales of the game, the price of Eidos shares is likely to go back up."

Although Eidos has been obliged to defer the launch of some other games into next year, it has E77.2m in cash and should start to see some benefit from a cost-cutting restructuring before the end of the year. Ubi Soft is not the first French games company to take an interest in Eidos. Two years ago Infogrames, the independent games company headed by Bruno Bonnell and best known for games such as Driver and Alone in the Dark, held unsuccessful takeover talks with its British rival.

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