The proposed deal sees EA outbid competitor Take-Two, which recently made a takeover offer of $971m.
Electronic Arts (EA), the entertainment company and video game developer, has offered to acquire Codemasters in a deal worth $1.2bn. The companies said they expect the acquisition to be completed in early 2021.
Codemasters specialises in developing racing games, such as the Formula One and Dirt franchises. According to CNBC, the acquisition of the gaming company would mark the biggest deal in EA history.
Another developer, Take-Two Interactive – the company behind such franchises as Grand Theft Auto and Red Dead – had already made an offer to buy the UK business for $971m in October. Take-Two has not yet commented on EA’s offer.
Codemasters chairperson Gerhard Florin said that his company and California-headquartered EA have a “shared ambition to lead the video game racing category”.
“The board of Codemasters firmly believes the company would benefit from EA’s knowledge, resources and extensive global scale – both overall and specifically within the racing sector,” Florin added.
“We feel this union would provide an exciting and prosperous future for Codemasters, allowing our teams to create, launch and service bigger and better games to an extremely passionate audience.”
Racing games developed by EA include the Need for Speed and Real Racing franchises. The company’s CEO, Andrew Wilson, said: “We believe there is a deeply compelling opportunity in bringing together Codemasters and EA to create amazing and innovative new racing games for fans.
“Our industry is growing, the racing category is growing, and together we will be positioned to lead in a new era of racing entertainment.”
Speaking to CNBC about EA’s acquisition offer, senior games analyst at Ampere Analysis, Louise Shorthouse, said: “EA clearly wants to position itself as the leading publisher in the racing games space.”
The offer comes after EA’s latest quarterly earnings report detailed a drop in revenue to $1.15bn in its most recent quarter from the $1.35bn it achieved during the same period last year. Its net income for the quarter dropped considerably compared to the previous year, clocking in at $185m compared to $845m.
However, COO and CFO Blake Jorgensen said the company was “on track to deliver strong growth this year” and expects “continued growth in fiscal 2022 and in the years to come”.
“All of our studios continue to execute amazingly well and have enabled us to launch an industry-leading eight games since the beginning of the fiscal year, while continuing to deliver live-services content and expand onto new platforms,” he said.
EA has also been investing in other gaming businesses. In September, it joined a Series A funding round for Bunch – a party app for multiplayer games with video chat – alongside General Catalyst, Take-Two, Riot Games, Ubisoft and more.