Electronic Arts made an agreement to buy U.K. racing game developer Codemasters in a deal worth $1.2 billion.
The deal advanced a previous transaction agreed between rival publisher Take-Two Interactive and Codemasters. The firm had agreed to acquire Codemasters for $971 million last month.
“The Codemasters Board has considered various aspects of the EA Offer and considers the EA Offer to represent a superior offer for Codemasters’ shareholders as compared with the Take-Two Offer,” the British firm said in a release.
EA said Codemasters’ shareholders would receive £6.04 in cash for each ordinary share of Codemasters. The deal is expected to be completed in the first quarter of 2021, EA added.
The acquisition of Codemasters is the biggest deal in EA’s history, and comes during increasing growth in the video game industry as the coronavirus pandemic has increased demand for gaming.
In September, Microsoft declared it would buy ZeniMax Media, the company that owns Bethesda Softworks, for $7.5 billion, the biggest gaming acquisition in Microsoft’s history.
Codemasters is famous for its Formula One and Dirt racing game franchises. A combination with EA would bring those big titles under the same ownership as popular racing game series Need for Speed.
Shares of EA rose about 0.8% in U.S. pre-market trading, while Take-Two was up about 0.2%.
“EA clearly wants to position itself as the leading publisher in the racing games space,” Louise Shorthouse, senior games analyst at Ampere Analysis said.
Shorthouse added the deal could “expose Codemasters’ broader catalogue to a larger audience,” as its games would likely launch on EA’s subscription service EA Play, which is itself available through Microsoft’s gaming subscription platform.
It was reported Sunday that EA had tabled a larger bid than Take-Two’s for Codemasters. Take-Two is behind some of the world’s most popular game franchises, including Grand Theft Auto and Red Dead.
“In some respects, EA’s move feels defensive, because they are already under attack from Take Two and many of their franchises are becoming second rate relative to leaders,” Neil Campling, head of tech, media and telecom research at Mirabaud Securities said.
Campling added that Take-Two could counter EA’s offer given the “strategic value” of Codemaster’s intellectual property and technology.
“Take-Two is considering its position in relation to Codemasters and a further announcement will be made when appropriate,” Take-Two said in a brief statement responding to the news Monday.