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Trinity34
19th Oct 2004, 00:11
Ubi Soft hit by possible Eidos takeover worries
Mon Oct 18, 2004 06:57 AM ET


PARIS, Oct 18 (Reuters) - Shares in French video games maker Ubi Soft (UBIP.PA: Quote, Profile, Research) fell to a 17-month low on Monday after comments by Britain's Eidos (EID.L: Quote, Profile, Research) that it was still looking for a buyer stoked fears Ubi Soft could embark on a costly acquisition.
By 1020 GMT, Ubi Soft shares traded 3.4 percent lower at 14.73 euros, lagging the European technology sector , after smaller rival Eidos said it was still trying to select a buyer.

American video games giant Electronic Arts (ERTS.O: Quote, Profile, Research) and THQ (THQI.O: Quote, Profile, Research) have been named in the trade press as frontrunners for the firm, creator of the "Tomb Raider" games, with Ubi Soft also tipped as a possible buyer.

A spokesman at Ubi Soft said on Monday the company had no comment.

Although a takeover of Eidos by Ubi Soft was far from certain, analysts pointed that it might be a costly and disruptive deal for Europe's second-largest video games maker after France's Infogrames (IFOR.PA: Quote, Profile, Research) .

"Ubi Soft is one of the serious contenders for the acquisition of Eidos but a takeover may not be that positive for Ubi, both in financial and operational terms," said Bruce Mari, analyst at Exane BNP Paribas.

"Despite a recent fall in Eidos's share price, Ubi would certainly offer a premium, making the deal costly and dilutive," Mari said, adding that a merger would also disrupt the research and development (R&D) process at both firms.

Any deal may lead to further delays in the launch of new games, an issue that has already made many investors jittery after Ubi Soft postponed in recent weeks the launch of key games like "Splinter Cell Chaos Theory".

Ubi's announcement in July that the Xbox version of the game "Far Cry Instincts," initially slated for a September launch, would be delayed to the first quarter of 2005, added to worries on the firm's ability to meet its sales and earnings targets.

Ubi Soft shares have shed 34 percent so far this year.

"Ubi has postponed nearly all of the games that were due out just in time for Christmas and this is likely to impact their annual results despite the company saying it won't," said an analyst who asked not to be named.


© Reuters (http://www.reuters.com/financeNewsArticle.jhtml;jsessionid=MV1DHRYZZFLGECRBAEZSFEY?type=mergersNews&storyID=6527457&section=investing) 2004.