(Alliance News) - Video game developer Take-Two Interactive Software Inc said Tuesday it has reached an agreement to buy smaller peer Codemasters Group Holdings PLC in a cash and shares deal worth GBP726 million.
New York City-based Take-Two is offering 485 pence per share for Codemasters, comprising 120p per share in cash and 365p in Take-Two shares. The deal was agreed on Tuesday, the pair said in identical statements.
Shares in Codemasters were down 4.5% in London Tuesday at 456.40p each, giving a market capitalisation of GBP695.6 million. Take-Two closed at USD159.99 in New York on Monday, and was trading slightly higher in pre-market trade on Tuesday.
Based on Take-Two's Monday closing price the deal is worth GBP726 million.
Take-Two Chair & Chief Executive Strauss Zelnick said: "We are exceedingly pleased to announce this recommended transaction with the board of Codemasters. Codemasters has a renowned history of creating some of our industry's most beloved and commercially successful racing franchises, and we believe that their offerings will be highly complementary to our sports portfolio and enhance further our organisation's long-term growth.
"Moreover, we look forward to welcoming Codemasters' senior management and development teams into our Take-Two family, and sharing in our vision to deliver the highest quality entertainment experiences and aim to be the most innovative, creative and efficient company in our industry."
Codemasters Chief Executive Frank Sagnier and Chief Financial Officer Rashid Varachia, along with the senior executive management team of Codemasters intend to remain with Codemasters following completion of the deal. They will continue to lead the Codemasters business within Take-Two's organisation and its 2K label.
The deal is expected to be accretive to Take-Two's pro forma adjusted net income per share from the first full year following completion - which is expected to be the financial year ending March 31, 2022.
Take-Two believes the deal holds a "compelling strategic and financial rationale".
"[The deal] creates a global leader in interactive entertainment publishing through the combination of Take-Two and Codemasters' complementary and critically-acclaimed sports and racing franchises and world-class creative teams," the pair said.
Take-Two also said the deal "enhances diversity" and "revenue visibility" of its IP portfolio through the addition of Codemasters' regular title release cadence and high-quality racing titles.
Codemasters specialises in racing titles and has the video game rights for the Formula 1 world championship. One of the company's latest games Dirt 5, was recently released for the PlayStation 4 computer entertainment system, the Xbox One family of devices including the Xbox One X, and PC.
Codemasters Chair Gerhard Florin said: "With a leading position in sports gaming, the board of Codemasters firmly believes the company will benefit from Take-Two's broad capabilities which will help propel the long term success of Codemasters. In recommending this offer to shareholders, the board of Codemasters believes it is in the best interests of all stakeholders in the company.
"Take-Two's offer reflects the great work the management team has done since listing on AIM in 2018 at 200p and delivers an excellent return for shareholders in just two and a half years."
By Paul McGowan; paulmcgowan@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
