Rivals target Lara Croft computer games maker for £215m takeover

Eidos, the troubled computer games publisher that admitted it was too small for an independent future, revealed yesterday it was in talks with several rivals about a possible deal.

Eidos, the troubled computer games publisher that admitted it was too small for an independent future, revealed yesterday it was in talks with several rivals about a possible deal.

Eidos, which has issued three profit warnings in 12 months, said it was in "preliminary discussions with a small number of parties in relation to possible business combinations".

Analysts said its options included succumbing to a takeover bid from one of its big US rivals, such as Electronic Arts, Activision or THQ, or merging with a small competitor. Robin Chabbra, at Evolution Beeson Gregory, said: "It is keeping open the option of being a consolidator." He predicted a bid could value Eidos at up to £215m, or 150p per share.

Shares in the company, which surged 10.5p to 107p on Monday, rose just 1p to 108p yesterday, which analysts said reflected the possibility that it would opt to pursue a merger.

Eidos said it would update investors next month when it reports its full-year results. It warned talks were at a "preliminary stage" and there was "no certainty as to whether they will lead to an offer being made for the company". It was keeping "all options under review".

In June, the company decided to delay the release of a forthcoming title based on the Vietnam War until September, blaming the soft games console market. It warned its move would probably tip it into a small loss for its 2003/04 financial year.

In May, Eidos said the sales performance of Hitman: Contracts had proved disappointing and would hit profits. Its market valuation has collapsed from more than £260m in May.

The company blamed its troubles on its lack of scale, which meant the decision to delay the publication of a game by a couple of months was financially ruinous. It is banking on Sony slashing the UK price of the PlayStation 2 from £149.99 to less than £100 next month.

Earlier this week, Ubisoft of France threw its hat into the ring for Eidos. Four years ago, Eidos abandoned merger talks with its French rival Infogrames.

Eidos said its lack of scale meant the number of games it could afford to invest in was restricted. Microsoft is expected to introduce a new version of the Xbox in 2006, with a new PlayStation console from Sony likely to follow soon after.