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Square Enix reveals Eidos bid

Tomb Raider and Final Fantasy to come together as directors endorse £84.3m offer for UK publisher

Square Enix has revealed that it is the company behind the offer to buy UK publisher Eidos, first noted in the middle of last month, which could end the long-running saga of uncertainty that's surrounded the Tomb Raider house since late 2007.

The bid is valued at GBP 84.3 million, and the Eidos board of directors have agreed to recommend the offer to shareholders, which is worth 32 pence per share - a hefty hike on the company's stock price at the time of the bid, and since.

Overall it's a premium of 258 per cent over the price at the time the offer was made, January 14, and a premium of 91 per cent over the price average of the last three months.

The agreement involved the acquisition of Eidos by a Square Enix holding company, called SQEX Ltd, and the Final Fantasy publisher hopes that the deal will "reinforce the Square Enix Group's position as one of the world's leaders in interactive entertainment with a broad portfolio of market leading franchises," according to a statement.

That statement also notes the position of Warner Bros, which holds 20 per cent of the company, and was thought for a long time to be sizing up a bid of its own for Eidos.

"Warner Bros Entertainment Inc is contractually obliged under a Subscription Agreement with Eidos to provide an irrevocable undertaking in respect of 52,518,080 Eidos shares representing approximately 20 per cent of the existing issued share capital of Eidos," it read.

President of Square Enix, Yoichi Wada, said of the deal: "Eidos is a talented developer and publisher of interactive entertainment products with a broad portfolio of highly successful mass market franchises, led by Tomb Raider, one of the most successful videogame franchises of all time.

"Eidos maintains a strong reputation for high quality development and proven expertise in creating characters and storylines that appeal to consumers. Eidos' products are highly complementary to our business and will accelerate our aggressive expansion into Western markets.

"We believe that wide range of both companies' quality products encompassing major genres will enable us to meet diversified customers' expectations upon a global basis."

And Phil Rogers, CEO of Eidos, added: "Eidos has a strong portfolio of established franchises, with highly talented employees. Square Enix recognises this and sees Eidos as both complementary to their business as well as a valuable brand within videogames.

"We are one year into our new strategy and believe that the prospects for the further development of our strategy and the business as a part of Square Enix would offer an exciting opportunity for the Eidos Group."

More details on the offer are expected to be posted in early March, with the offer to be put to shareholders at an EGM.

Background to the offer

The future of Eidos, formerly badged SCi, has been uncertain ever since an initial acquisition bid was launched in September 2007 which the company said it was considering.

That process dragged on, with no better offers coming in for the publisher, until early 2008 - by which time the company stock has fallen to a fraction of its previous value, and the former management team resigned.

Phil Rogers then took over as CEO with the task of steadying the ship and went about restructuring the business into a studio-led set-up, as well as entering into a strategic partnership with Warner Bros, which saw the media giant take a slice of the company and responsibility for US distribution.

Speculation over further acquisition bids continued, with Infogrames/Atari revealing that it had made a bid in the middle of last year which was rejected, while the directorship movements of Warner Bros Interactive Entertainment president Kevin Tsujihara stoked the fire further.

The business didn't fare as well as expected over the Holiday trading period, following worse-than-expected sales of its flagship Tomb Raider title - blamed partly to distribution issues in the US - and the share price hit its lowest point in the middle of January, the point at which Square Enix submitted its offer.

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Phil Elliott