Eidos Share Discussion Threads

[darrens] 16/2/2009 09:38

Interesting wording on their statement. Perhaps it's just standard but I agree with dealy, nothing's really changed and it looks like TW have just announced what was their legal obligation anyway.

[dealy] 16/2/2009 09:34

Everything is still open. TW have not capitulated. We have no more information today than we had on Friday.

We could 32p or we could get more. We could even get substantially more.

[magic] 16/2/2009 07:44

what about this bit

These undertakings will cease to have effect if the Scheme Document (or, if
relevant, Offer Document) is not posted within 28 days of the date of this
announcement (or such later date as the Panel may agree), the Scheme (or
takeover offer as applicable) does not become effective, lapses or is withdrawn,
Warner Brothers Entertainment Inc. or a member of the Time Warner Inc. group
announces a higher offer or a third party announces a recommended higher offer.

[togglebrush] 16/2/2009 07:39

See first 7.00 RNS Today... extract below ... Time Warner ACCEPT offer

Further to the announcement made on 12 February 2009 of the recommended cash
offer for Eidos by SQEX (the "Announcement"), SQEX discloses, in accordance with Rule 8.4 of the Code, that it has an obtained irrevocable undertaking from Time Warner Entertainment Limited to vote in favour of the Scheme and the resolutions to be passed at the Court meeting and the Extraordinary General Meeting in respect of their aggregate holding of 52,518,080 Eidos Shares representing approximately 19.92 per cent. of the existing issued share capital of Eidos.

[magic] 16/2/2009 07:36

Now that TW have given an irrevocable undertaking, the only downside seems to be withdrawl of the SQEX offer with potential upsides of a TW or third party bid at 36p or above.

Sounds like a good punt... or have I missed something??

[kooba] 16/2/2009 07:36

tw accept offer...job done.though they have left a window still.

[life of crime] 14/2/2009 17:51

I take your point Darren. I'm just not sure how much of the past month has been spent hawking the business around to potential bidders, or in trying to re-negotiate the debt covenant. None of us knows, but I would be shocked if they had not been in touch with Lloyds to rollover the debt, if only to strengthen their bargaining position.

I was sure they could secure a deal with the bank but it seems, despite the Govt pumping billions into the financial system, the banks are not interested in lending. Anthony Worral Thompson, the celebrity chef, will have to close several restaurants because he cannot get a £200K extension to a loan of £2M he got last year. It was when I heard that I began to doubt whether Eidos could push back their repayments. It seems the banks are only interested in getting their money back and if a business goes to the wall as a result, or is forced into a sale, so be it.

If the board has been focused on the debt situation and trying to salvage their independent status, which they ought to have been, then perhaps there has been less of a "behind closed doors" auction than you think.

Now a firm offer is on the table, I expect another bid to come forward. TW may have been aware of the price but what incentive was there for others to make an offer in the dark (and risk over paying) when they could wait for the other bidder's valuation to be made public and decide then.

There will be around a month before the Square deal is put to the vote, so a lot can happen by then. Who knows, maybe even a private equity deal could emerge. Buying good, but distressed businesses is their meat and drink. I assume there must be some PE firms, like 3i, who still have some cash left! Taking them private, inserting fresh funds (and management) and growing the firm away from the glare of publicity (and the gyrations of the stock market) could make them a lot of money in a few years, either through a trade sale or future floatation. Perhaps Elevation might be interested again?

Anyway, enough from me; let's see what happens. I suspect the soap opera that is Eidos has a few cliffhangers still to come.

[darrens] 14/2/2009 15:41

loc, no I said this time the company would definitely be sold so I was right on that one. I was sceptical that anybody would be paying anything much over 15p, let alone 30p, so I was wrong on that one.

But the difference in perceived value in Eidos between myself and Square doesn't change the fact that the company has been up for a sale for a month so any bidding war should have already been managed by the Board.

However, as I said, the 32p seems safe whatever happens so buying at a little over that means you can only lose a little and (potentially if remotely) gain more.

[dealy] 14/2/2009 15:18

TW have little to lose if they offer 40p per share - unless of course they don't want to own the company.

If they offer 40p and get the company - well they got a company on the cheap.
If they offer 40p but a counter bid comes in - well they would have managed to increase the value of their stake.

Then there is the question of what other industry players think. Would ERTS or Ubisoft be happy about somebody else owning Eidos?

[life of crime] 14/2/2009 14:01

Fair enough Darren, but weren't you sceptical that anyone would make a bid at all, let alone at this level?

I'm sure lots of companies have been weighing up an offer but somebody has to make the first move. Now a bid is on the table it gives the others something concrete to base an offer on. As I said earlier, I will not be surprised to see Ubi make an approach involving stock to leverage their strong share price after a good trading statement and my views on TW are well known. My feeling is that a 3 way, or at least 2 way, auction is more likely than nobody else stepping in. We have a couple of weeks yet to find out.

I'm thinking of a "safe" punt myself, as the worst that can happen is I pay 32p and get 32p back, less stamp and commission costs.

[darrens] 14/2/2009 13:26

Well, the only thing I'd say to temper any talk of any sort of bidding war is that Eidos has been up for sale since the trading statement and has been inviting bids. Therefore, it doesn't unreasonable to conclude that they've already had the chance to see who's been willing to pay the most and have accepted the best offer.

This isn't an out of the blue hostile bid situation which could lead to a bidding war, the company has had the "for sale" sign up ever since the trading statement.

Given that 32p seems "safe" then it may be worth punting on an outside chance of a higher bid coming in but that's the least likely scenario even if it isn't impossible.

Personally I'll leave it to the arbitragers but I can't help making some sort of comment on Eidos while I still can. 13 years of talking about Eidos about to come to an end and I can't help but feel slightly misty-eyed.

[life of crime] 14/2/2009 12:31

Lionheart, I think a bid would have come in anyway, but the weakness of the £ certainly helps an overseas bidder. I think its one of the reasons why UbiSoft may make an offer, as the Euro is so strong to the £ at the moment. Don't be surprised if they use the strength of both their currency and their share price to make a part cash, part stock offer for Eidos.

I think they would make a good fit for Ubi and cement them as the No 1 publisher in Europe.

[lionheart79] 14/2/2009 12:20

I wonder if the £ hadn't been so weak whether Eidos would have been left to fizzle out on its own.

[kooba] 14/2/2009 11:49

you guys should be buying loads then if you are right and the market is wrong...happy days.

[life of crime] 14/2/2009 11:34

I agree dealy. The shares were priced to go bust when Square approached and they offered 32p when the market valued Eidos at 10p, so they certainly don;t get it right all the time.

No one makes their best offer at first so I'm sure Square would increase their bid if a counter offer came in. The UbiSoft interview I posted was interesting as they did not rule out an approach for Eidos and that was the day before the Square deal was announced.

My best case scenario is a three way tussle between TW, Ubi and Square, with Ubi winning with an all or part stock offer at circa 50p. Realistically, I expect TW to win out eventually with a cash bid somewhere between 40-50p. I certainly don't expect Square to come through without a challenge in the next few weeks and an increase to the current offer is highly likely IMO.

[dealy] 14/2/2009 11:18

Kooba,

When the shares were 8p a month ago the market wasn't very good at assessing the likelihood of a bid, was it? When Isoft went through a bid battle in 2007 there was never a time that the shares traded at a premium to the current offer price.

Never believe the argument that "the market is always right".

[togglebrush] 14/2/2009 10:54

My estimates of shareholdings:-

There are_ 263,586,730 shares in issue.
These are details from Annual reports and recent RNS's. But positions are changing daily.

Time Warner___________________52,518,080

People
Jane C_________________________9,634,037
Robert T______________________13,000,000 roughly

Institutions
Committed for Square

Cazenove Capital Management___15,590,783 noted in own name(see Joint)
With Insight Invest___________34,225,256

Undeclared

Deutsche Bank AG_____________ 23,841,568
ING Bank NV___________________11,454,648
Pioneer Investments____________9,148,355
Legal & General Investment_____8,918,628 29 Jan 09
Barclays_______________________6,942,194 28 Jan 09
RBS____________________________5,496,853 28 Jan 09

The directors who held office at 30 June 2008 had the following interests in the shares of the Company:
___________30 June 2008 30 June 2007
_________________Number Number
Tim Ryan________ 81,488 43,141
Nigel Wayne______21,110 11,176
Don Johnston____ 41,555 22,000
Phil Rogers, current CEO, bought 60,000 22 Sept 08 (he paid 31.5p)

[kooba] 14/2/2009 10:38

perfectly logical really the price is an equilibrium of buyers and sellers,in a bid situation like this much research and analysis is done by risk arbitragers assessing the possibilities,therefore the price is an excellent indicator of reasoned chances of a higher offer emerging.

[dealy] 14/2/2009 10:09

That article is so illogical. It implies that unless the share price is significantly higher than the current offer there is no chance of another bid.

Another bid could come from numerous sources at any time. It could be a complete surprise.

I would argue the chances of a competing bid are totally unrelated to whether the share price above the current offer or not.

[kooba] 14/2/2009 10:02

the times.February 14, 2009

Hopes for Eidos bid battle fade

Smaller companiesPeter Stiff
Hopes of a counter bid for Eidos appeared to fade yesterday as shares in the developer of the Lara Croft computer games closed the week just ½p above the level of an existing £84.2 million bid by Square Enix, a Japanese rival.

Market rumours suggested that Time Warner, which already holds 20 per cent of the company's shares, was considering a bid ahead of the release of a game based on its Batman franchise.

However, a banking source said the shares were originally acquired by Warner Bros, the company's film business, as part of a distribution deal and were not considered to be a strategic investment by its parent TimeWarner.

Eidos shares, which more than doubled on Thursday after Square Enix, which develops the Final Fantasy and Dragon Quest role playing titles, made its 32p a share bid, ticked up only ¾p to 32½p yesterday.

[togglebrush] 14/2/2009 09:47

This looks like the first HEAVY weight poker session, in the proverbial 'smoke filled room', of the year. The BoD are just the cloakroom attendants at this one as they own diddly squat of the equity. But the BoD have a walk on role with Interims on 26th.

The Jane C faction, with memories of last year still in mind, have their own agenda and a fair sized vote.

Robert T saw much of his equity disappear in October but still carries a heavy vote. The overhang from the backing to his CFDs probably disappeared with the 17 million trades on Thursday. That overhang destroyed the share price and made the % increases for the Take Over Bid look wonderful.

Original Institution investors are suffering heavy losses. The take over price is still below rights issue in May 2008.

Recent speculators have made a nice recent profit but will they risk it for more (Greed).

There are currently two potential protagonists will they become foes or friends??? The permutation and combinations of possible deals is wide and if third parties get involved even more complex.

PI's are just distant on lookers at this game. The result may surprise everyone!

[zelig] 14/2/2009 08:37

What are the rules regarding TW holdings and them making a bid? If they are interested or pehaps deliberating. A small overbid could potentially make them millions if sqex rebid. Presumabley this is allowed becasue the risk remians that the orignal bidder may not rebid?

Whatever the truth regarding consultation with TW, I think we can reasonably say that the door is not closed for a counter bid, which it may well have been if TW had been quoted as giving their irrevocable undertaking

[dealy] 14/2/2009 08:12

If I was a 20% shareholder that was contractually obliged to accept an offer anyway I would wait and see what the offer was first before giving an opinion. That way I could extract maximum leverage. As far as Square was concerned they would get a de facto acceptance from TW anyway (unless there was a higher offer) so they had nothing to gain or lose by discussing with TW.

I think TW will make a competitve bid for two reasons:

a) they genuinely want to own Eidos
b) they just want to get a higher price for their 20% stake so they will entice a higher offer out of Square or another party

I genuinely believe we will see 50p here before the end of March.

[alanrex] 13/2/2009 22:34

DarrenS, I completely agree. I think the definition of consultation may differ, but TW would have known about the approach and certainly about the price at the end. They may not have liked it or otherwise. Clearly the opportunity still exists for a counter bid and i do not rule this out, but whether they have the will is another matter

all imo dyor

[darrens] 13/2/2009 21:47

Nigel, perhaps they were in the loop but weren't happy with the offer. Maybe they wanted more money from Square. Maybe they wanted Eidos but weren't prepared to go as high as Square.

Lots of maybes but the only thing that is surely certain is that they were consulted on the deal. You can't consult some shareholders and not the one that owns a fifth of the company.