Time running out for Eidos to save itself
Games company may be forced to sell Lara Croft
Richard Wray and Neil Hume
Friday March 11, 2005
The Guardian
Eidos, the British computer games company that created Tomb Raider's Lara Croft, has two weeks to clinch a takeover deal or it will be at the mercy of its bankers.
The former gaming flagship has seen delays to key games, such as Championship Manager, eat through its cash while takeover talks with a number of potential bidders have dragged on for more than seven months.
As Eidos announced a wider than expected half year loss yesterday, the company's bankers appeared to say that enough is enough. Shares in the company sank to a 10-year low.
The Royal Bank of Scotland, which has loaned Eidos £23m, has given the company until March 25 to clinch a deal or get funding from elsewhere otherwise it will demand that Eidos starts selling off parts of its business.
A similar fire sale was carried out last year by heavily indebted French computer games company Infogrames Entertainment, which ironically made an approach to buy Eidos four years ago. Eidos walked away from those talks after the two sides were unable to agree on a price.
The French company sold off its successful Civilisation gam ing franchise and industry analysts believe Eidos may have to sacrifice Lara Croft or possibly its Hitman series of games to keep its bankers happy.
But Eidos insiders appeared confident last night that an offer for the business can be clinched before the bank's deadline.
Eidos said yesterday that it has received an approach at a mere 53p a share, valuing the once high-flying company at £75m. But the bidder, believed to be a venture capital firm, still has to get its own house in order before it can make a formal offer.
Eidos said the deal on the table is subject to "one principal condition", which was unspecified, but is understood to have nothing to do with the buyer raising the cash for any acquisition or be related to any action Eidos itself must take.
Some in the market believe there are a number of other potential buyers waiting in the wings for Eidos, which said it had first been approached in August last year
Eidos is believed to have received interest from venture fund Elevation Partners which counts U2's lead singer Bono among its managing partners and was founded by John Riccitiello, the former president of video game maker Electronic Arts.
A number of trade buyers have also been mooted as interested in Eidos including Ubisoft, Europe's third-largest games developer, and Rupert Murdoch's News Corp.
Industry analysts, however, believe it would be easier for any potential trade buyer just to wait for Eidos to collapse and pick up the pieces rather than buy the business outright.
Eidos was yesterday forced to admit that while the long-running takeover saga has rumbled on its business has deteriorated. It announced a larger than expected pretax loss of £28.7m for the six months to end December compared with a profit of £7.8m in the previous year. Sales of £31.4m were well down on the £78.7m recorded in the previous year. Sales of titles such as Get On Da Mic, Backyard Wrestling 2 and Crash 'n' Burn were also below expectations.
Poor sales and delayed releases mean the company's cash has dropped from £37.4m at the end of June last year to £11.8m six months later. To conserve its money the company has been forced to delay the release of new Lara Croft and Hitman titles until later in the year.
"As these results show, the first half has been a very difficult period for Eidos," admitted chairman John van Kuffeler.
http://media.guardian.co.uk/newmedia...00.html <br />
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Thought this might interest people, i know Eidos have been having some problems over the last year or two, looks like they still arent recovering
TROD.
Eidos..
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