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Take-Two Interactive Is In Talks To Acquire Codemasters For $973m

WRITTEN BY | 09 Nov 2020
Take-Two Interactive Is In Talks To Acquire Codemasters For $973m
M&A

đź’µ Acquisition

  • U.S.-based video game giant Take-Two Interactive Software (NASDAQ:TTWO) has made a non-binding proposal to acquire UK-based racing games developer Codemasters Group (LON:CDM) for $973m (ÂŁ740m)

    • The offer consideration is based on a $6.4 price per share, which includes ~24% premium over Codemasters’ pre-offer price assuming the initial offer discussions were held on October 14, 2020;

    • The consideration is expected to be paid ~25% in cash and ~75% in TTWO shares;

    • The preliminary transaction valuation multiples are 9.7x Revenue, 40.7x EBITDA. The multiples will be adjusted in November 2020 based on interim results for the six months ended 30 September 2020.

  • The possible deal offer remains conditional on multiple factors including the decision of the Codemasters’ Board and the due diligence results

    • By December 4, 2020, Take-Two Interactive must announce its final decision about its intention to make an offer or not. The deadline can be extended only by the special panel

  • On November 6, 2020, following the official announcement the Codemasters’ shares saw an 8.6% increase, while Take-Two’s shares were up 2.9%

Source: Codemasters website

đź’  Strategic Rationale

  • Codemasters’ acquisition offers multiple benefits to Take-Two Interactive:

    • The complementary product portfolio of high-quality Premium & GaaS racing games to the existing 2K publishing label (sports, arcade);

    • Further diversification of gaming portfolio across platforms — increasing presence in mobile and cloud;

    • Cross-selling opportunities for existing customers of Take-Two and Codemasters;

  • Leveraging Take-Two’s expertise in publishing and live operations, Codemasters can significantly improve its financial performance over the next few years

🎲 Products

  • Codemasters is one of the leading video game developers and publishers of racing titles such, as DiRT, GRID, the F1 series, and Project CARS across multiple platforms including PC, console and mobile

    • Despite being focused primarily on PC and Console platforms, Codemasters has several mobile titles, including F1 Mobile Racing, F1 Race stars, Boom! Tanks, and others;

    • The company is also present on the cloud gaming market with GRID featuring as a launch title on Google Stadia release.

💸 Take-Two’s Latest Acquisitions

  • In October 2020, Take-Two acquired Ruffian Games, the developer of the third-person shooter Crackdown 2, for an undisclosed sum

  • In September 2020, Take-Two Interactive has acquired NYC-based mobile puzzle games developer Playdots for $192m, expanding its presence in the F2P mobile games space

  • In February 2017, Take-Two Interactive acquired Spain-based mobile game studio Social Point for $250m, making a move into F2P mobile games

 

SOURCES: CODEMASTERS, REUTERS
NOTE: exchange rate of ÂŁ1:$1.32 is used

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M&A
Take-Two
  • Established in 1993

  • Headquarters — New York City, United States

  • Founded by Ryan Brant

  • Team of 5000+ employees

  • Latest annual report

  • Video game publisher and developer

Codemasters
  • Established in 1986

  • Headquarters – Southam, United Kingdom

  • Team of 700 employees across 4 UK studios (Cheshire, Birmingham, and London)

  • Founded by — David Darling and Richard Darling (brothers)

  • Latest annual report

  • Racing games developer and publisher for Console, PC, and mobile platforms > Key franchises include Formula One, DiRT, GRID, and Project CARS