SCi soars as mystery bidder approaches

SCi Entertainment, the computer games developer behind Lara Croft's Tomb Raider series, has been approached by a mystery bidder, setting in train a new round of speculation over who will win the hand of the iconic British video-game character.

SCi has been the subject of regular bouts of takeover speculation due to its well-regarded portfolio of game franchises including the Tomb Raider, Hitman and Total Overdose titles. Electronic Arts has long been considered a suitor whilst Ubisoft of France has also regularly been linked with a takeover. Warner Brothers is also considered a potential buyer of the business as it has already purchased a 10 per cent stake in SCi.

Consolidation in the video games sector is commonplace due to the volatility of the market and the huge up-front investment in developing high-end hit games on new platforms such as the Xbox 360. Although SCi has a strong stable of titles, it is still relatively small compared to large global competitors like EA. Since its acquisition of the larger rival Eidos in 2005, SCi has performed well, but recently revealed it would need to take a £14m hit due to a slowdown in the sale of games for the PlayStation 2 console.

The resulting share price collapse has opened the door to a takeover and SCi's shares have surged 13 per cent to 384p on the back of the approach. However, with large shareholders including Warner Brothers and the property tycoon Robert Tchenguiz having built large stakes in the company up to the 500p level, bidders may have to factor in a substantial premium to secure a deal.

SCi, which has rebuffed two takeover approaches in the past, described the talks as "extremely preliminary". Analysts said EA may look instead to acquire Ubisoft rather than SCi. Yet John Riccitiello, chief executive of EA, was a founding partner of Elevation Partners, the private equity company that unsuccessfully bid against SCi to buy Eidos, suggesting he admires the business.