SCi stock up 25 per cent as takeover talks are confirmed

Leading British publisher SCi Entertainment Group has confirmed that it is in talks with a number of potential suitors regarding an acquisition of the group, less than half a year after it acquired rival firm Eidos in a GBP 74 million deal.

Reports of the acquisition talks came this morning from two British daily newspapers, the Financial Times and the Daily Mail, with the latter naming Electronic Arts, Midway and investment firm Apax Partners as the interested parties.

For its part, SCi's board - which controls the rights to properties including Lara Croft: Tomb Raider, Championship Manager, Hitman, Deus Ex and Conflict - issued a terse statement this morning confirming that "it has received approaches from various parties which may or may not lead to an offer for the Company."

SCi's share price rose by almost 30 per cent in trading today after the announcement, and is currently trading up over 25 per cent to 600 pence - valuing the firm at just over GBP 433 million.

While Electronic Arts is by far the largest of the named suitors, the company - which was also regularly named as an interested party when Eidos was for sale - isn't known to have any appetite for massive acquisitions such as this one, and while SCi's properties are potentially attractive, there would be huge overlap between the two businesses which it would be expensive and wasteful to remove.

Apax Partners is also seen as a curious suitor by some market watchers who spoke to GamesIndustry.biz today. Although the private equity firm has an interest in the games sector - having held stakes in mobile gaming firms JAMDAT and I-Play - it would be unusual for such a large equity gamble to be made on a mature but still risky firm such as SCi.

Of all the named suitors, Midway is perhaps the most intriguing. The firm has been increasingly bullish over the past couple of years, since Viacom chairman Sumner Redstone became the majority shareholder in the firm and replaced much of its top management with his own appointments.

Since then, Midway has bought out a number of large North American developers and now operates a formidable range of internal studios there, as well as clocking up several respectable hits in its portfolio of titles.

However, it remains almost entirely US-focused, with little in the way of European operations - and while acquiring a major European publisher like SCi would be a huge step for the company, probably doubling it in size overnight, the prospect of acquiring one with a strong, self-sufficient management team and good profit prospects is likely to be appealing to the firm.

Of course, at present, everything remains in the realms of pure speculation; few would have guessed, when Eidos went onto the market, that its eventual purchaser would be the comparatively tiny SCi, and at present only the barest outlines of information about any possible deal for SCi exist - but the prospect remains that a half-billion pound deal could yet put the UK's largest remaining publisher in overseas hands.