Elevation Partners is giving up Eidos

Now it is official. Elevation Partners has step down from the race and Eidos is going for SCi. At the moment there are no other possible candidates for the take over race, so apparently it is now quite safe to say that we will have a new SCiEidos on the video game industry map.

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Eidos going once, going twice...

Guardian and Financial Times informed us that Eidos is dropping the Elevation Partners offer and moving towards SCi. Like I said earlier, Elevation Partners is in the business of making money, not in the business of making video games. Let me tell you the secret of making money as an investment company. The secret is – buy cheap and sell expensive. Everything in between in just management decisions.

I guess that Elevation Partners just thought that the price was too high. If the price is high at the start, it takes lot of managerial talent to get the price even higher. Let’s face it. Eidos management has almost bankrupted the company by now, so obviously there wasn’t much trust to the management’s ability to show the money.

Therefore Eidos goes to SCi, which happens to be in the business of making video games. They have proven track record and they have plans to elevate once glorious British video game industry back to the highest pedestal where it belongs. Eh, not quite so, but you get the picture.

For the Eidos share price this is sad news. It is quite possible that there will not be competing offer and therefore price starts to fall. If Eidos price falls, then SCi price will fall too. Investors think that it is nonsense to pay such high prices from either of companies, because the case is already settled. Now it is just your stock against mine. This lock-up means that cycle goes both ways, positive and negative. Final result, now it doesn’t take increasing sums to buy Eidos. This is all the excitement we have left. We can wait and see, if someone is dropping hefty offer just before the deal is done.

Nintendo financial results

Another Gamesindustry.biz article. Apparently Nintendo has done well during the past year. Weak yen has done lot to realize the financial standing. They are planning to increase dividends, because owners have been complaining about measly dividends that they have given earlier. Correct me if I’m wrong, but isn’t is so that Japanese companies tend to rely on bank loans more than their own capital. This would mean that banks have stronger lock on the company’s actions than investors and therefore dividends could be lower. Well, just a thought.

Eidos climbing higher

Did you notice that Eidos is again valued over 100 million pounds? Tomb Raider Chronicles had this piece of news. Strong showing, remember what I said about positive pricing cycle? If this positive cycle goes on, then it means that any further offer from Elevation Partners will even raise the tempo, because they just have to set their price so that it estimates even further price increases. For the moment, the dynamics of this deal still work for SCi’s advantage. Elevation has to show more than 100 pounds to turn the tide, so tight the lock-in of Eidos shareholders seems to be.

Another article about virtual items

I noticed yet another mainstream media article about IGE and the new and fascinating way of life as a virtual item seller. IGE estimates market size to be around 880 million dollars and bulk of this value comes from Korea and China. Brokers employ players from poor countries to create the supply. Some comments from Castronova, which makes the article bit more interesting.

Gizmondo hits the retail channels

Gizmondo is reported to be selling well. Half a million pre-orders are in the bag. The Gameindustry.biz story doesn’t tell whether these orders that are now going to retail channels, have already found end user buyers or not. Ingredients are here for similar dud as what happened with N-Gage, nice amount of deliveries to stores but no buzz among the gamers.

Eidos board might get ousted

Telegraph was kind enough to notify of following: things are turning ugly at Eidos as shareholders are threatening to sack the whole board of the company less they manage to recommend owners to accept SCi’s offer. At the moment board is still on the side of Elevation Partners’ offer that stands 50 pence per share, however, the share is currently trading at 66p. Analysts believe that the Eidos board is giving more time for Elevation Partners to up the ante. That’s the spirit, bargain to the very end. Of curiosity, Eidos have to pay 700,000 pounds for Elevation Partners, if they break away and strike a deal with SCi.

I wonder, if that money is enough to cover all the expenses that Elevation Partners have made while preparing the deal? If yes, then they have their backs covered and they can take their time and evaluate current price level of Eidos.

SCi grabbing even bigger share

New Ratings.com notified that SCi has managed to secure the support of about 30% of Eidos owners. Markets seem to count possible purchase as good thing and this has been raising SCi stock price. As SCi offers all-stock purchase the terms for Eidos owners are improving constantly, hence there is a positive cycle that will probably tip the scale for SCi.

Ubisoft mulling to buy Rare?

Coola at XBOX365 wrote that rumours are running rampant and whisper that Ubisoft is going to purchase Rare from Microsoft. Rare is also European company and that is supposed to be the added benefit for Ubisoft. Deal is or is not made official at E3.

In my opinion this will not happen. If Microsoft does this, they are going to loose lot of money. Ubisoft is in no condition to pay hefty sums of 350 million dollars like Microsoft did. On the other hand, Microsoft has deep pockets to cover realized accounting losses and discount selling is a good way to get rid of money loosing operation that ties up lot of capital. Ubisoft has to have excellent plans for Rare if they are going to handle this deal with good conscious.

Analyst firm goes MMORPG

What is it with these ever expanding Chinese companies? My favourite market research firm, covering Chinese markets, Pacific Epoch, is now going MMORPG. Game will be licensed from Korea but later hopes to develop their own games. Game designers should also be able to sub as market analysts. They claim that their office anyhow has free space and they need online game industry analysts. So, apparently it is win-win for everybody. I can’t comment anything but say that barriers to markets must be real low in Chinese online games industry. I could try my luck there, eh?