EA To Buy Codemasters For $1.2B; Street Is Cautiously Optimistic

Electronic Arts Inc. has agreed to buy UK-based game developer and publisher Codemasters for $1.2 billion, with shareholders expected to receive £6.04 in cash per ordinary share of Codemasters.

Electronic Arts (EA) believes that the union of the two companies will allow them to leverage each other’s significant expertise, which will enable further innovation and increase the delivery of content and experiences to a growing audience.

Codemasters (UK:CDM) is mostly known for their Formula One and Dirt racing games and players will now also benefit from a combined portfolio of sports and racing games through EA’s multi-platform subscription services.

EA feels that they can help accelerate Codemasters’ performance by integrating them into their technological infrastructure and expanding their share of the gaming market.

“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.”, said CEO of EA, Andrew Wilson. (See EA stock analysis on TipRanks)

Stifel Nicolaus analyst Drew Crum reiterated his Buy rating on EA last month with a price target of $145, which suggests upside potential of 9% based on the most recent closing price.

Consensus among analysts is a Moderate Buy based on 8 Buys and 9 Holds. The average price target of $144.28 implies a potential upside of around 5% over the next 12 months.