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EA swoops in to buy Codemasters

December 14, 2020

California-based game company Electronic Arts, producer of the FIFA franchise, has offered almost a billion euros for the British racing simulator specialist. Sales of video games have surged during the pandemic.

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Players try out a Formula 1 game at the Gamescom computer games fair in Cologne. Archive image from August 2018.
Codemasters makes the F1 racing games and other leading racing titlesImage: Revierfoto/dpa/picture alliance

Video game giant Electronic Arts has said it would buy Britain's Codemasters in a deal worth $1.2 billion (€987 million).

The offer trumps an earlier agreement between the British company and rival Take-Two Interactive Software.

UK-based Codemasters said Monday the new offer was superior to Take-Two’s cash-and-stock buyout offer of 485 pence per share.

Codemasters, founded in the 1980s, is one of the oldest British game developers. It produced early hits like Dizzy for systems that were popular in the UK, such as the ZX Spectrum and the Commodore 64.

In recent decades the games maker has been best known for creating racing games like the Dirt, Grid, and Formula 1 series, and last year acquired the developer behind Project Cars.

The other interested party in the purchase, Take-Two Interactive, is the company behind games including the Grand Theft Auto and Red Dead series.

EA is among the world's biggest computer games developers, and is best-known for its FIFA-licensed football titles and an array of other sports simulators, as well as games based on the Star Wars films.

FIFA 20 is introduced at a games conference in Cologne
Electronic Arts produces the popular FIFA seriesImage: Imago-Images/A. Hettrich

The firm has a market value of almost $40 billion (€33 billion/£30 billion).

Games manufacturers, such as California-based EA, have benefited from a surge in video game sales in the United States.

Experts say sales have been boosted by the trend of people spending more time indoors due to the COVID-19 pandemic.

However, that could change next year when countries begin vaccinating people against COVID-19.

A person plays a soccer simulator at the Cologne computer game exhibition
Sales of video games have risen during the coronavirus pandemicImage: imago/R. Traut

In a note to clients, analysts at Citibank said that Codemasters was "an attractive asset" owing to its presence in "the lucrative Chinese market."

EA, maker of The Sims, Need for Speed and FIFA, said it expects the deal to grow net bookings and underlying profitability.

"We believe there is a deeply compelling opportunity in bringing together Codemasters and Electronic Arts to create amazing and innovative new racing games for fans," said EA's CEO Andrew Wilson. "Our industry is growing, the racing category is growing, and together we will be positioned to lead in a new era of racing entertainment." 

Interest in simulation racing was also fueled earlier in 2020 when F1 drivers and other professionals competed on their computers in virtual competitions while the real-life racing was delayed by the pandemic. 

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UBS Investment Bank is acting as financial adviser to Electronic Arts, while Jefferies is the financial adviser for Codemasters.

jf/msh (AFP, Reuters)