Electronic Arts has agreed a deal to acquire Codemasters for approximately $1.2 billion.
The acquisition, which is expected to complete in the first quarter of 2021, is based on a price of $7.98 per share for the UK publisher.
In explanation for the deal, Codemasters chairman Gerhard Florin said that both companies "have a shared ambition to lead the video game racing category."
"We feel this union would provide an exciting and prosperous future for Codemasters, allowing our teams to create, launch and service bigger and better games to an extremely passionate audience," Florin said in a statement.
EA CEO Andrew Wilson added: "Our industry is growing, the racing category is growing, and together we will be positioned to lead in a new era of racing entertainment.
"With the full leverage of EA's technology, platform expertise, and global reach, this combination will allow us to grow our existing franchises and deliver more industry-defining racing experiences to a global fan base."
When complete, the deal will add a host of racing IPs to EA's stable, including Formula One, Dirt, Grid and Project Cars. EA already owns established franchises like Need for Speed, Burnout and Real Racing.
Codemasters CEO Frank Sagnier and CFO Rashid Varachia will remain in the same roles when the acquisition has completed, along with Codemasters' entire senior executive management team.
This is a surprising development in the ongoing story around Codemasters acquisition, with Take-Two Interactive having led the process until recently. That bid was significantly lower, however, valuing Codemasters at around $870 million.
Reports of EA's interest in acquiring the firm only surfaced this weekend.