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Eidos Recommends That Shareholders Accept SCi Offer

by Rainier on April 7, 2005 @ 10:18 a.m. PDT

In the ongoing drama surrounding the Eidos take-over, it now seems we may finally be coming to a close. Where initially Eidos announced a deal with Bono's Elevation investment group, SCi quickly made a counter offer which is gaining more and more momentum. Today Board of Eidos plc has undertaken further discussions and due diligence with both the Board of SCi Entertainment in relation to SCi's share offer of one SCi share per six Eidos shares and Elevation Partners, L.P. in relation to Elevation's cash offer of 50 pence per Eidos share.

In the light of the recent movement in the SCi share price, and in the absence of an increased cash offer from Elevation, the Board recognises that whilst there are certain key risks for Eidos shareholders in accepting the SCi Offer (as described more fully below) the current implied value of the SCi Offer of 72.8 pence per Eidos share based on the closing price of SCi shares on 6 April 2005 represents a significant premium to Elevation's Offer.

The Board has also noted the level of support for the SCi Offer evidenced by shareholders representing approximately 41 per cent. of Eidos' share capital who have irrevocably committed to accept the SCi Offer.

Taking these factors into consideration, the Board, who has been so advised by UBS Investment Bank ("UBS"), its financial adviser, consider that the terms of the SCi Offer are fair and reasonable. Accordingly, the Board unanimously recommends to Eidos shareholders that they accept the SCi Offer. In providing advice to the Board, UBS has taken into account the commercial assessments of the Board.

As referred to above, the Board and UBS consider that Eidos shareholders, in assessing whether or not to accept the SCi offer, should have regard to a number of key issues which will need to be addressed by the Board of SCi, including:

  • the requirement for scale to compete effectively in the computer games industry - on the basis that the combination of Eidos and SCi will not result in a significantly larger business;
  • the successful integration of the Eidos and SCi businesses - recognising that Eidos is much larger than SCi, operates internationally and pursues a different approach to the development of its games;
  • the retention and motivation of key employees of the Eidos business.

Shareholders who do not wish to be exposed to such risks, or the potential volatility in the SCi share price (especially in the light of SCi's recent strong share price performance), may wish to consider selling their shares for cash in the market.

As a consequence of the foregoing the Board has withdrawn its earlier recommendation of the Elevation Offer.

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