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Codemasters Group shares boosted as GTA parent Take Two Interactive lines up takeover


Shares in British video game developer Codemasters Group Holdings PLC (LON:CDM) started the week positively following Friday’s news that one of the world’s major studios is in talks over a possible GBP735mln takeover.

Take-Two Interactive (NASDAQ:TTWO), the US$20bn publishing house behind Grand Theft Auto and the 2K branded sports games, is pitching its possible offer at a price of 485p per shares, of which 120p will be in cash and 365p will be paid in Take-Two shares.

Codemasters said it is the board’s intention to unanimously recommended the offer to shareholders, should a firm offer be made.

It added that a further announcement will be made as and when appropriate, and that on November 23 it will announce its interim results for the six months ended September 30.

If it goes ahead, the transaction will deliver a pair of leading motor racing game franchises to Take-Two.

Codemasters has the rights to the F1 franchise and its latest edition for 2020 is among the year’s top-selling titles, meanwhile, DIRT 5, a rally racing game in the lineage of 1990s hit Colin McCrae Rally, is set to be a key launch title on the next generation Playstation 5 and Xbox Series X consoles which release to consumers this month.

The takeover approach comes as the video games industry is evidently booming.

Major games publishers have this reported a significant spike in revenues and profits amidst the COVID-19 pandemic as gamers have increasingly reaches for their control pads for entertainment during the various phases of lockdown and social distancing.

Dynamics in the retail environment have at the same time seen revenues soar as digital game purchases and in-game transactions have allowed publishers to capture a higher share of sales directly to consumers at home.

Codemasters, for example, in October reported GBP80.5mln of revenue for the first six months versus GBP39.8mln in the comparative period of 2019.

Indeed, Take Two last week reported a 37% rise in income per share, whilst cash generation from operating activities amounted to US$626.7mln, up 335%, and first half revenue tallied at US$841.1mln.

Take Two, on November 5, highlighted that its better-than-expected second quarter had triggered an upgrade to 2021 outlook and said it is ” exceedingly well positioned to capitalize on the many positive trends” in the industry.

In London, Codemasters shares rose by 2.77% to change hands at 483p each.

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