Bid battle to rescue Lara Croft

A BID battle has broken out for video games group Eidos after SCI Entertainment trumped an earlier agreed £71m takeover with a £76m counter offer. SCI, which publishes software games, is offering one of its shares for every 6 shares in Eidos, which is best known for its Tomb Raider games featuring Lara Croft.

SCI said its offer valued each Eidos shares at 53.6p, higher than an earlier bid from US private equity company Elevation Partners which valued Eidos at 50p a share. Eidos had agreed to the bid by Elevation, which counts U2 Irish rock star Bono among its partners.

Officials at Eidos and Elevation Partners could not be immediately reached for comment on the SCI offer. Eidos shares were up 27.4% at 57p, suggesting investors think the battle has further to run. Shares in SCI, which is raising £60m in a fully underwritten placing and open offer to help fund its bid, were up 5.3% at 338½p.

'Over the last three years SCI has delivered strong sales and profit growth and consistently delivered product on time and on budget,' SCI chief executive Jane Cavanagh said in a statement.Cavanagh added that Eidos's recent financial woes had 'not done justice" to the strength of its brand name.

'We are completely confident that the application of our successful business model across the enlarged group will significantly enhance shareholder value for both SCI and Eidos shareholders,' she added.

Earlier this month Eidos was given a fortnight by its bankers Royal Bank of Scotland to come up with a bid or risk breaching the terms of a temporary £23m loan.

Eidos said last June that it was undertaking a strategic review of its operations and concluded that its prospects of continuing as an independent entity were limited, due to the high cost of developing new games.

Eidos chairman John van Kuffeler said that the business needed a partner to be able to survive in the competitive computer games market. He added: 'The board firmly believes that shareholders' interests are best served by a sale of the company.'

Shares in Eidos hit a 10-year low two weeks ago as delays to key new titles, tough terms on a bank loan and a first-half loss outweighed news of the takeover approach.

Eidos has struggled to launch games on time and several have either hit the market late or failed to live up to commercial expectations. The company has been particularly affected by weaker sales in the US, its key market.

Eidos posted a bigger-than-expected £26.5m operating loss before goodwill in the last six months of the year. Turnover was also down, dropping 60% to £31.5m.

Besides U2's Bono, Elevation Partners was formed by Roger McNamee, a high-profile investor in numerous US technology firms. Other partners include John Riccitiello, the former president and chief operating officer of Electronic Arts.