Video-game maker SCi Entertainment, based in Britain, said talks with potential suitors to acquire the company have ended, and there's no deal been made. SCi Entertainment is the company that has made notable hits like "Tomb Raider" and "Kane and Lynch."
According the company, the reason for the talks ending are they "no longer believe a sale of the company for its full value is likely to be achieved at the current time." That's another way of saying they wanted more for the company than it was considered worth.
Shares in the company got clobbered Friday after the announcement was made, losing over half their value.
As Simon Davies, an analyst at ABN Amro said, the company isn't ready to concede its problems yet, and so anyone interested in acquiring it will wait around until more pain is administered, and the price lowered to what it's really worth.
"None of this is entirely surprising -- the shares had already halved since the bid approaches were first announced in September -- and it looks like a case of history repeating itself, with Eidos going through a very similar process before its acquisition by SCi at a knock-down price in 2005," said Davies.
SCi says it will probably incur an operating loss this year, based on its strategy to launch their showcase franchise "Tomb Raider: Underworld" across six platforms next Christmas. Their other option would have been to launch it three platforms in June.
They seem to think they'll get greater value with the simultaneous launch saying, "... these simultaneous multiplatform launches in the key buying period optimize the value that these franchises can deliver to the company over the long term."
Hearing that it makes me think they're running out of operating capital. Maybe they can tap Time Warner (TWX) which owns a 10 percent stake in the company. They definitely need something to give them a boost. This business should be able to flourish in the gaming market at this time.
Even in the midst of economic turmoil the overall market is expected to do good in 2008.
» SCI Entertainment Sacks 3 Key Executives from TheAlphaMarketer
Only about a week after announcing there was no deal made to acquire the company, SCI Entertainment, creators of "Tomb Raider" and "Kane and Lynch," sent three of their top executives packing, including CEO Jane Cavanagh. Others als... [Read More]
Tracked on: January 18, 2008 9:35 PM | Permalink to Trackback