Eidos does due diligence on would-be buyers

Merger or purchase coming soon?

UK games publisher Eidos has formally begun looking into the backgrounds of possible suitors, the company said today, having whittled down the list of prospective partners to those it believes have a good chance of proposing.

The announcement marks the latest stage in the attempt by Eidos' management to seek a buyer, the conclusion of a strategic review carried out by the company's board and revealed in June this year.

In August, Eidos confirmed it was talking to a number of parties concerning the sale. Since then, it said today, it has held "preliminary discussions on a confidential basis with short listed candidates as well as with certain other interested parties who approached us directly". Naturally enough the company isn't willing to comment on the identities of anyone it has held such a conversation with.

However, it has now begun the due diligence process with "certain of these parties".

Behind the need for a sale lies Eidos' red balance sheet. In the year to 30 June 2004, the publisher lost £2m - down from income of £17.4m the previous year - on an 11.6 per cent decline in turnover to £133.9m.

Part of the problem is Eidos' ongoing inability to get major releases out of the door on time. ShellShock: Nam '67 has sold 800,000 units since its September release, Eidos said, but then the game was supposed to have shipped back in June this year. Likewise, Eidos' big pre-Christmas release, the latest in the Championship Manager series, has been put back from October 2004 to sometime between January and June, the company said.

Other top-league titles coming up in the second half of Eidos' fiscal year include the next instalment of the long-in-the-tooth Tomb Raider series and a sequel to Hitman.

The company admitted that the outlook for the company continues to be "challenging", and it tacitly admitted that despite a wealth of talent, it simply hasn't had sufficient hits. Hence the need to join forces with a fellow publisher or developer who has. ®

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