Bono's £71m bid for Lara Croft trumped

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The Independent Online

Elevation Partners, the US private equity fund backed by the U2 singer Bono, has been trumped in its £71m bid to acquire Eidos, the Lara Croft computer games company.

Elevation Partners, the US private equity fund backed by the U2 singer Bono, has been trumped in its £71m bid to acquire Eidos, the Lara Croft computer games company.

The Eidos board yesterday recommended a rival all-share bid from SCi Entertainment that was worth £103m before the stockmarket started trading yesterday morning. The SCi share price subsequently fell 6 per cent during trading, but Sci's bid still represents a large premium over Elevation's cash offer. Elevation is understood to have made it clear to Eidos that it does not intend to raise its bid for the present time.

However, the Eidos board was grudging in its recommendation, warning its shareholders that they still faced "key risks" if they accepted the SCi offer. Eidos advised its shareholders, more than 40 per cent of whom support the SCi deal, that they may wish to consider selling their holdings in the market rather than accept SCi's shares.

It said SCi shares had witnessed "recent strong performance". Eidos warned its shareholders that the SCi share price could prove volatile in the light of the recent rises, clearly implying that it thinks the SCi share price could fall steeply after the deal concludes.

In a statement, Eidos highlighted three risks facing its shareholders if they accept SCi's all-share offer. It said the deal would not create a significantly larger business in a market that requires scale to compete effectively. It pointed to integration risks arising from the more international nature of the Eidos business and its different approach to games development. It also warned there would be risks to retaining and motivating key Eidos employees.

SCi, which makes the Hitman and Conflict computer games, hit back at the Eidos statement. Rob Murray, the company's finance director, said: "Just because you've got 50 products and thousands of people doesn't necessarily make your products any better."

SCi pointed out that it had a strong track record of profitable growth compared to recent losses incurred by Eidos, which in early March warned shareholders it faced a fire sale of assets to meet the terms of emergency short term banking arrangements agreed with the Royal Bank of Scotland.

SCi is raising £60m as part of the deal to invest in the Eidos assets. It said it intended to make Eidos employees members of new share-based incentive plans.

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