Will Time Warner Acquire Eidos?

Eidos Shares slip 25% fueling possible drastic action – sale?

Time Warner buy $US10mil shares in Eidos!

by XboxOZ360:

©2009 Grant Smythe:

So many developers are losing ground over the last year and it seems even extremely large ones like Eidos are not immune either, especially after recent losses.

At a recent investment conference Time Warner showed interest in the gaming market, as reported at Gamasutra.  It is interesting to note that this could herald a bid by Time Warner for the failing Eidos Development Studios, especially given recent job losses and financial difficulties.

Although Martin said he’s not looking at anything specific “of any scale that we’re going to go out and acquire,” he noted, “I think it’s going to be done incrementally.”

The suggestion of increments makes Time Warner an even more likely front-runner for an acquisition of British publisher Eidos, as it’s twice increased its existing stake in the company over recent months, most recently purchasing an additional 10 million shares in Eidos in mid-December.

Gamasutra:

Now you just do not go buying that many share just to be helpful to the competition . . . !

Poor sales of Tomb Raider: Underworld have had shareholders jump ship and Eidos’ stock value has sunk by 25%, prompting the gaming company to re-state their annual profit/loss figures for the fiscal year. This has seen the Eidos company lower its full fiscal year revenue predictions from £180 -£200 million ($273-$303 million) down to £160 to £180 million($243-$273 million). They are warning shareholders of a loss of over $US20 million in sales for 2008.

For us that sounds like a lot, but for a major ‘listed’ company, that shows a drop in their future vision and ability to move forward. Their last fiscal year saw a pre-tax loss of £136million which is not good in anyone’s language.

On the London’s Stock Exchange Eidos recovered slightly, but is still down from £17.25 ($26) a share on Thursday to a current value of £12.75 ($19).

As mentioned, Time Warner have stated they are looking at acquiring several studios on an incremental basis, with some interest shown for Eidos.   Despite Eidos’ under-performance, not only on Tomb Raider: Underworld, but on other major titles, Time Warner may be out for a bargain company that still has talent and big name IPs like Tomb Raider.

If Time Warner get hold of the company this would see shares rise again. The thing is, more and more developers are now becoming the property of the movie studios, which could mean a glut of poor movie game tie-ins in the coming years.  Or maybe, if miracles can happen, some good ones?

Time Warner now have the rights for the Lego Series of Star Wars and Batman, so another development studio currently working on a further Batman franchise (Batman: Arkham Asylum) would be welcomed. Eidos now says it’s passed its “peak net debt position”, so they may have to renegotiate for further lending later in 2009. So even if they don’t get bought now, a great deal will depend on the success of the upcoming Batman: Arkham Asylum and if it fails to reach the desired sales forcasts, then the door would be wide open for a take over or purchase.

At a recent Investors conference in Arizona, Time Warner Inc. (TWX) Chief Financial Officer John Martin commented that a recent acquisition of U.K.-based video-gaming company TT Games was “wildly successful,” and it has a great deal of interest in expanding in “that industry”.

This goes on top of recent events with the huge shock loss of Free Radical recently. There luckily has been interest in Free Radical discussed with Gameindusry Biz from their Adnministrators ReSolve Partners:

ReSolve expects to be able to make a decision on the future of the business this month, after receiving interest from games companies and investors worldwide.

“At this stage interest has been very strong,” offered Cameron Gunn, of ReSolve Partners.

“We’re advertising the business and assets for sale and there’s been some significant interest expressed from all over the world, so we’re now in the process of exploring that interest.

“The sale process itself will take a few weeks to run through, so we are thinking at this stage probably towards the end of January we should be in a better position to know whether or not we’ve got a decent sale – mid to late January,” he added.

GameIndustry Biz:

With all this happening, it’s little wonder many mid-sized developers are staying with less risk-based ventures and keeping to known brands and titles. Which is a shame, but to be expected.

©2009 Grant Smythe:

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Filed under: Console gaming, Industry News, Rumor Mill, Xbox 360, Xbox 360 News | Tagged: edios, Free Radical, Haze, Time Warner, Tomb Raider, Tomb Raider: Underworld, Underworld, Warner