Report: Midway eyeing SCi, VUG not

Several months ago, SCi Entertainment finalized its purchase of its onetime rival Eidos Interactive. The British company ended up paying 72 million pounds ($125.6 million) in stock for the publisher of the Hitman and Tomb Raider games, following a bidding war with US venture capital firm Elevation Partners. (Elevation would go on to underwrite the union of top independent developers BioWare and Pandemic Studios.) SCi has since put almost all of Eidos' holiday 2005 releases on hold due to "financial review," including Hitman: Blood Money, 25 to Life, and Tomb Raider: Legend.

Now, SCi itself has become the subject of takeover talk. This week, British financial daily The Business reported that Midway Games is among several companies eyeing a takeover of the publisher, which is currently valued at 406 million pounds ($708 million). Though Midway is losing money, thanks to a spate of flops including L.A. Rush and Gauntlet: Seven Sorrows, it does have a potentially vast source of capital to draw on. The publisher is almost entirely owned by Sumner Redstone, the multibillionaire CEO of global media giant Viacom.

Games industry analyst Nick Gibson told The Business that "Midway is a midtier publisher, as is SCI, and to compete with Activision and Electronics Arts, the market leader, they both would benefit from the synergies of being put together."

Another potential suitor mentioned was VU Games, owned by media conglomerate Vivendi Universal. After losing money for years, VUG is currently flush with cash, thanks to a string of PC hits, including Half-Life 2, S.W.A.T. and the wildly popular World of Warcraft.

[UPDATE] However, late Thursday, VUG issued a terse denial of any interest in SCi. "In view of articles published in the UK press, Vivendi Universal denies any interest in SCi Entertainment and also denies having made any offer."

The Business article said the third would-be SCi-buyer was a non-game-related British venture capital group, Apax.