The Eidos takeover bid is continuing to twist and turn today as financial analysts have called into question the commercial viability of Ubisoft’s bid. It is thought that the projected value of Eidos has been artificially escalated as a result of so many interested parties engaging in negotiations. Ubisoft’s offer of $215 million apparently attaches an excessive 40% premium to Eidos’ real value, and this could easily threaten shareholders’ confidence in the plan.
Eidos’ value had been falling steadily throughout this year. In May, when the rumours first started circulating, Eidos was optimistically valued at around $325 million, with shares floating around the 185p mark. By August, shares had fallen to 150p each, and Ubisoft’s $215 million bid now outweighs the value of the company. It is no wonder that Ubisoft’s share value has taken a plunge today, as many investors interpret this news as an excessive payout for a risky acquisition.
This will be good news for the other publishers circling around Eidos’ negotiation table. If weighty offers from the likes of Sony, Microsoft and EA had forced up the bidding, those same companies will be pleased to have pushed competitor Ubisoft into this somewhat delicate predicament. Similarly, the reaction from shareholders may discourage Ubisoft from pressing ahead, in which case alternative negotiations can be resumed.
If Ubisoft does buy Eidos, it will have to work quickly to realise the value of its assets. Should a combined Ubisoft-Eidos organisation flail for too long in this competitive industry, Ubisoft could find itself stalked by the same giant publishers that it had been bidding alongside in the first place.
However, this does look increasingly unlikely. MCV has reported that Ubisoft is looking closely at buying Codemasters instead, which by most measures, would be a much more conservative and pragmatic acquistion. It has also been suggested that EA has come up with an offer of $300 million for Eidos, which would probably see it win the bidding hands-down, with only Microsoft and Sony able to compete at that level.
Once the fog of the bidding-war has settled, SPOnG will do its best to ascertain the victors and the casualties. Expect an update as soon as the spoils have been officially handed out.