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Codemasters on verge of £945m EA takeover

British videogame developer, Codemasters (AIM:CDM) watched its shares soar on Monday, as it announced it would turn down a takeover offer from Take-Two Interactive, in favour of the bid made by Electronic Arts Inc. (NASDAQ:EA).

The company statement said that “Following the announcement today of a recommended cash offer for Codemasters Group Holdings plc by Codex Games Limited, an indirect subsidiary of Electronic Arts Inc., for the entire issued and to be issued ordinary share capital of Codemasters, the board of directors of Codemasters confirms that it has withdrawn its recommendation of the offer for Codemasters made by Take-Two Interactive Software, Inc. and that it intends unanimously to recommend the EA Offer.”

EA have offered a takeover price of 604p per share, which represents a total acquisition value of £945 million, for Codemasters’ issued and to-be-issued share capital. The CDM Board said that it has taken ‘various aspects’ under consideration, and views the EA offer to represent a superior opportunity for it’s the Group’s shareholders.

The company said that it proposes to adjourn the Court Meeting and the Group General Meeting (in relation to the Take_Two offer), set to be held on 21 December 2020. It added that further announcements will be made ‘as and awhen appropriate’.

Following the announcement, Codemasters shares jumped 20.63%, up to 644.15p a share 14/12/20. This price is far-and-away the company’s all-time high, and around 36.7% ahead of analysts’ target price of 407.50p apiece.

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Despite the apparent disparity between analysts’ most recent price target and its current level, analysts currently have a consensus ‘Buy’ stance on the stock, while the Marketbeat community issues an abnormally bullish 80.99% ‘Outperform’ rating on the Group’s shares.

Today’s acquisition news, though not finalised, rounds off a booming year for the gaming industry. With some big releases such as GTA VI, and Bethesda’s next Elder Scrolls instalment, not being released until 2021 and 2022, the pandemic has seen the rise of some unexpected entrants, and has caused some small competitors to become titans.

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