Electronic Arts Completes Acquisition of Codemasters

Nasdaq-listed game developer and publisher Electronic Arts (EA) announced that it has completed the acquisition of U.K.-based racing game developer and publisher Codemasters. EA acquired the developer through its subsidiary Codex Games, which has been established in the U.K. for the sole purpose of implementing the acquisition, at a per-share price of £6.04 GBP ($8.43 USD) at an implied enterprise value for Codemasters of £945M ($1.32B). EA financed the acquisition with cash on hand.

As a result of the acquisition, trading of Codemasters shares on the London Stock Exchange’s AIM market was suspended Thursday morning and is expected to be canceled on Friday. Furthermore, all of Codemasters’ non-executive directors stepped down from the company’s board.

Codemasters is primarily known for its racing games, including the officially licensed F1 game franchise, driver journey-focused simulator Project Cars 3, and recently launched story-driven off-road racing game DIRT 5. The acquisition will add Codemasters’ racing games to EA’s racing game portfolio, which includes several arcade racing games such as the Need for Speed franchise. EA intends to integrate Codemasters into its EA studios organization.

EA explained that the acquisition of Codemasters is “part of its growth strategy focused on delivering more exceptional experiences and top live services, and reaching more players on more platforms around the world.“ The company is looking to grow existing franchises by expanding the addressable market through uniting EA and Codemasters. EA expects the acquisition to “result in access to more platforms, reaching more geographies, and integration into more business models to increase consistency, reach, and revenue.”

Triggered by the acquisition, the management teams of EA and Codemasters initiated a review of the operation of both businesses to assess how they can work effectively and efficiently together and a review of Codemasters’ products in the context of Codemasters’ strategic objectives within the wider EA group to understand how to leverage EA’s publishing and commercial knowledge to enhance Codemasters’ product performance. The completion of the reviews is anticipated to take up to 12 months.

Additionally, EA revealed that it intends to maintain the conditions of employment of the currently approximately 756 Codemasters employees and expects only minimal consolidation of the existing studios and operational centers of Codemasters due to the complementary nature of EA and Codemasters and the limited areas of overlap.

Prior to EA’s offer to acquire Codemasters, its competitor Take-Two Interactive Software negotiated a possible acquisition with the company’s board of directors and made an offer to acquire the company at £4.64 ($6.47) per share in November 2020. Following the announcement from Take-Two, EA made an initial approach to Codemasters and submitted its acquisition proposal at £6.04 ($8.43) per share on Dec. 10, 2020. Last month, Take-Two announced that it ceased its efforts to acquire Codemasters and Codemasters’ shareholders approved the acquisition proposal by EA.


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