SCi, Eidos discuss takeover

The wheeling and dealing surrounding the inevitable sale of Eidos took some near-definitive steps today, according to British newspaper The Guardian. The London-based daily is reporting that executives from current suitor SCi Entertainment Group met with members of the Eidos board to discuss the rival publisher's offer.

The Eidos board has reportedly recommended that the $144 million bid by venture capital outfit Elevation Partners (which counts among its principals former Electronic Arts president John Riccitiello and U2 lead singer Bono) be accepted. Based on the specifics of the Elevation offer, however, the Eidos board needs only rally 25 percent of Eidos shareholders to block it, according to The Guardian. The main distinguishing feature between the two offers is dramatic: Elevation Partners offer is an all-cash bid, while SCi's is all stock.

What's behind the vastly different bids? "The key issue is whether the Eidos Board will go for paper vs cash. A growing number of shareholders appear to want SCi paper, while its in the management's interest to take the cash offer which would allow some of them to keep their jobs," said Paul Heydon, Managing Director of Unity Capital.

The meeting today assembled executives from both companies and placed them together at SCi's Battersea, London, headquarters. SCi CEO Jane Cavanagh had her finance boss, Rob Murphy, and marketing exec, Bill Ennis, negotiating on behalf of SCi, while Eidos CEO Mike McGarvey and others represented the Eidos board.

Elevation Partners' all-cash offer will afford current Eidos investors and management a quick exit strategy. For those who stay on, the group has said going private would enable Eidos to "develop games on a schedule which permits maximum creative flexibility," minus the usual reporting requirements a public company is held to.

The SCi offer comes with a more conservative pitch. Earlier, SCi's Cavanagh said in a statement, "We believe that this is an excellent opportunity for both Eidos and SCi shareholders to invest in a major computer games publisher at a time when the global market has never been bigger."