Take-Two In Bid To Snap Up Codemasters In $973M Videogaming Deal

Take-Two Interactive Software has confirmed that it has made an offer to buy all of the issued share capital of UK-based game publisher and developer, Codemasters, at an enterprise value of 739.2 million pounds ($973.01 million).

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Under the terms of the bid, Take-Two (TTWO) is proposing to buy Codemasters at a price of 485 pence (about $6.40) per share, consisting of 120 pence (about $1.58) per share in cash and 365 pence (about $4.82) per share payable in Take-Two stock. The offer is conditional on the completion of due diligence talks and the recommendation of Codemasters’ Board of Directors.

The Board of Codemasters confirmed to Take-Two that if the video gaming company announces a firm intention to make an offer it will recommend unanimously that its shareholders accept the buyout proposal.

“Take-Two believes that the combination of Take-Two and Codemasters would bring together two world-class interactive entertainment portfolios, with a highly complementary fit between Take-Two’s 2K publishing label and Codemasters in the racing genre,” Take-Two commented in a statement. “In addition, Take-Two believes that it can bring benefits to Codemasters’ performance by leveraging Take-Two’s global distribution network and 2K’s core operating expertise in publishing, including live operations, analytics, product development, and brand and performance marketing.”

Take-Two, the US games publisher behind Grant Theft Auto, is required to make a definitive offer for Codemasters, by not later than December 4 this year. Codemasters is well-known for its racing games, including the Dirt Rally and Formula 1 licenses.

Shares in TTWO are up just over 43% so far year-to-date, and analysts have a bullish Strong Buy consensus on the stock’s outlook. That’s alongside a $197.82 average analyst price target, indicating additional upside potential of 13% for the coming months.

Following the release of TTWO’s quarterly results on Nov. 6, Wedbush analyst Michael Pachter reiterated a Buy rating on the stock with a Street high $210 price target (20% upside potential), citing “significant” long-term potential from the company’s release pipeline.

“We expect stronger frontline release slates coupled with ongoing recurring momentum to result in meaningful top and bottom-line growth beginning in FY:22 for several years,” Pachter commented in a note to investors. “We value TTWO shares at a slight premium to its peer group due to its superior growth prospects.” (See TTWO stock analysis on TipRanks).