Eidos, the video games firm that six weeks ago warned disappointing American sales and product delays could push it into the red, has confirmed it is in takeover talks with several prospective bidders.
The group's share price has been rising in recent days and there has been persistent speculation that Eidos could be a takeover target as the games industry consolidates.
Among the possible suitors are American rivals, Take Two, Electronic Arts, Activision and THQ, as well as French groups Infogrames and Ubisoft, which have shown an interest in the past.
In a statement to the stock exchange, Eidos said it "confirms that ... it is in preliminary discussions with a small number of parties".
One analyst yesterday said a likely takeover price would have to be at least 130p to 150p a share, valuing Eidos at £185m to £215m.
Shares in the company, which produced the Lara Croft Tomb Raider games series, yesterday closed up 2.09p at 109.09p. In May they halved in value to below 90p following an announcement that American sales of the Hitman: Contract game had been disappointing and would have a "very significant" impact on full-year results.
The May statement added that Eidos' new title - ShellShock: Nam '67 - would be available before the company's year-end in June. A month later the company said the release date had been delayed until September - a move that left the board "expecting to report a breakeven to small loss for the financial year".
Recent years have seen the company issue a string of profit warnings on the back of product delays. However, it has had some success recently in repairing its poor reputation for delivering product to market on time.
Eidos insists that ShellShock is ready for release, claiming the delay was a decision designed to maximise sales of the game. A spokesman said the company wants to time the release to better coincide with an anticipated reduction in the price of Sony PlayStation 2 games consoles. Some had expected Sony to bring down the price in the first six months of 2004 but it is now thought to have delayed the cut.
Eidos's latest woes come as it heads in to the slowest months of a traditionally cyclical sector. The summer is always slow for games manufacturers, and Eidos and its rivals must wait until the start of 2006 before they can expect to enjoy a sales spike prompted by a new generation of consoles.
Six weeks ago the firm in effect put itself up for sale, saying: "The board is mindful of the potential benefits of scale." It acknowledged it is seen as overly dependent on key titles and is likely to struggle to meet the increasing cost of games development in the future.
