Going, Going, Gone... News
Chris Leyton
22/03/2005
SCi spurred into action and table a bid for the UK publisher...
Following on from earlier news, it appears that Bono and Co at Elevation Partners may not have secured the acquisition of Eidos just of yet, as fellow UK publisher SCi has today tabled an offer.
The news comes after TVG first reported SCiās interest last week, and represents a share for share offer, with the basis of one new SCi share for ever six Eidos shares held. As of March 21st 2005 the closing price of SCi shares is worth 321.5 pence, effectively valuing Eidos shares at 53.6 pence and the whole share capital of Eidos at approximately £76.1 million.
SCi plans to raise approximately £60.1 million to strengthen the balance sheet, and place sufficient funds to rebuild and enhance Eidos key brands, improve its pipeline of products, provide adequate working capital to bring products to the market and fund the cost of reducing Eidosā cost base.
The move will cement SCiās position as the leading UK based videogame publisher and help to establish it on the worldwide map, while boosting its catalogue with a number of proven brands such as Tomb Raider, Hitman and Championship Manager along with a number of new IPās.
As Elevation Partners had previously identified, SCi will delay a number of titles to ensure only the highest quality titles come to the market and can be launched alongside high-profile PR and marketing campaigns.
Eidos descent into turmoil was largely as a result of mis-management and the burdens of having to answer to shareholders, and whilst the merger with SCi will still be at the back and call of the city, SCi has identified cost savings as a crucial area for improvement. Using its expertise in delivering products on-time and on-budget, SCi will hopefully utilise this to improve Eidos notorious reputation for slippage.
SCi will also look at the expenses associated with Eidos, citing costs of £22.2 million for administrative expenses (representing 16.5% of turnover) during its last financial year as reasons for Eidos current position on the market; in contrast, SCiās administrative expenses totalled £3.2 million. SCi believes the costs of executive management, being a public company and maintaining a NASDAQ listing as representing a substantial portion of Eidosā overhead base and believes it will save close to £14 million during the first year of operations as a result of cost savings.
SCi has made its intentions of cancelling Eidos shares on the London Stock Exchange known under certain conditions, although itās not yet clear as to whether this will occur or not.
Commenting on the Offer Jane Cavanagh, Chief Executive of SCi said:
"We believe that this is an excellent opportunity for both Eidos and SCi shareholders to invest in a major computer games publisher at a time when the global market has never been bigger.
Over the last three years SCi has delivered strong sales and profit growth and consistently delivered product on time and on budget. Whilst Eidos' brands, studios and staff have significant potential, its continued financial problems appear to have resulted in rushed development cycles, missed deadlines and products that have not done justice to their brands. We are completely confident that the application of our successful business model across the Enlarged Group will significantly enhance shareholder value for both SCi and Eidos shareholders."
So whatever next, perhaps bids from Activision or another US giant or perhaps weāre left with the prospect of āSCIDOSā; weāll keep our ears pressed to the ground and bring you more information soon...