TIDM0IFX TIDMCDM

RNS Number : 4706I

Electronic Arts Inc.

14 December 2020

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

14 December 2020

RECOMMENDED CASH ACQUISITION

of

CODEMASTERS GROUP HOLDINGS PLC

by

CODEX GAMES LIMITED

an indirect subsidiary of

ELECTRONIC ARTS INC.

(to be implemented by way of a scheme of arrangement under Part 26 of the Companies Act 2006)

Summary

-- The boards of Electronic Arts Inc. ("EA") and Codemasters Group Holdings plc ("Codemasters") are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition by Codex Games Limited ("Bidco"), an indirect subsidiary of EA, of the entire issued and to be issued share capital of Codemasters (the "Acquisition"). It is intended that the Acquisition be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act (or, if Bidco so elects, with the consent of the Panel, an Offer). 


   --        Under the terms of the Acquisition, Codemasters Shareholders will be entitled to receive: 
   for each Codemasters Share             604 pence in cash

-- The terms of the Acquisition value Codemasters' entire issued and to be issued share capital at 


approximately GBP945   million (US$1,248 million) on a fully diluted basis. 
   --        The terms of the Acquisition represent a premium of approximately:

o 14.4 per cent. to the current value of 528 pence per Codemasters Share implied by the cash and share offer made by Take-Two for Codemasters announced on 10 November 2020 (the "Take-Two Offer") (based on Take-Two's closing price of US$190.21 and the exchange rate of US$1.32:GBP1 on 11 December 2020, being the last practicable date prior to the date of this Announcement);

o 72.6 per cent. to the Closing Price per Codemasters Share of 350 pence on 22 September 2020, being the date of Take-Two's initial proposal to Codemasters;

o 55.7 per cent. to the volume weighted average price per Codemasters Share of 388 pence in the 90 days ending on the 5 November 2020 (being the day prior to media speculation of Take-Two's possible interest in an offer for Codemasters); and

o 38.9 per cent. to the Closing Price per Codemasters Share of 435 pence on 5 November 2020 (being the day prior to media speculation of Take-Two's possible interest in an offer for Codemasters).

-- EA believes the combination of EA and Codemasters creates an opportunity to deliver further growth and success for Codemasters' and EA's popular and innovative franchises. In an industry where IP is deeply valuable, the union of EA and Codemasters will create a global leader in racing entertainment. Bringing together Codemasters' critically-acclaimed sports and racing franchises Formula One, DiRT(R), GRID(R) and Project Cars with EA's global Need for Speed franchise, fan-favourite Real Racing mobile game and EA SPORTS brands, along with the combined expertise of the respective teams, will allow EA to innovate further and meaningfully increase the delivery of content and experiences that appeal to a growing, global audience for racing entertainment. Codemasters has deep creative talent and has produced high-quality racing games for many years, including the Formula One franchise that continues to deliver great entertainment for F1's growing fan base. EA believes it can help accelerate Codemasters' performance by leveraging EA's deep genre expertise in live services operations, data science and game analytics, as well as access to EA's central development and technology teams across an array of disciplines, including art and motion capture, quality verification, compliance and localisation. Additionally, EA's global publishing, marketing and game development support capabilities will also expand the addressable market for Codemasters' franchises. Ultimately, a combination of Codemasters and EA will enable EA to deliver a market-leading portfolio of creative and exciting racing games and content to more platforms and more players around the world.

-- EA believes there is a compelling strategic and financial rationale for the Acquisition because it: 


   o   creates a global leader in racing entertainment experiences;

o provides an opportunity to significantly grow the revenue of Codemasters' high-quality racing titles by providing access to EA's:

-- data science and analytics team;

-- global publishing and marketing resources;

-- live service expertise;

-- data and network security;

-- technology infrastructure; and

-- 330 million-strong player network.

o enables the Combined Group to deliver more racing experiences to fans, building momentum and presence with this important audience;

o enables the cross-fertilisation of ideas, expertise and technology between the racing development teams of the Combined Group, accelerating development and innovation, and the identification and adoption of best practices;

o delivers compelling financial benefits for the Combined Group. The Acquisition is expected to grow net bookings and underlying profitability; and

o creates ongoing and expanded engagement opportunities for EA and Codemasters sports and racing games through EA's industry-leading multi-platform subscription services.

-- The Codemasters Directors, who have been so advised by Jefferies as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing its advice to the Codemasters Directors, Jefferies has taken into account the commercial assessments of the Codemasters Directors. Jefferies is providing independent financial advice to the Codemasters Directors for the purposes of Rule 3 of the Code.

-- Accordingly, the Codemasters Directors intend to recommend unanimously that Codemasters Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting (or, if the Acquisition is implemented as an Offer, to accept such Offer).

-- In light of the Codemasters Directors' intention to recommend the Acquisition by EA, the Codemasters Board has today announced that it has withdrawn its recommendation of the Take-Two Offer and that it proposes to adjourn the Codemasters shareholder meetings convened for 21 December 2020 to consider the Take-Two Offer. 


   --        Commenting on the Acquisition, Andrew Wilson, Chief Executive Officer of EA, said:

"We believe there is a deeply compelling opportunity in bringing together Codemasters and EA to create amazing and innovative new racing games for fans. Our industry is growing, the racing category is growing, and together we will be positioned to lead in a new era of racing entertainment. We have admired Codemasters' creative talent and high-quality games for many years. With the full leverage of EA's technology, platform expertise, and global reach, this combination will allow us to grow our existing franchises and deliver more industry-defining racing experiences to a global fan base. We are pleased that both our Boards of Directors are recommending this transaction, and we look forward to welcoming such an exciting and talented team to the EA family." 


   --        Commenting on the Acquisition, Gerhard Florin, Chairman of Codemasters, said:

"Electronic Arts and Codemasters have a shared ambition to lead the video game racing category. The Board of Codemasters firmly believes the company would benefit from EA's knowledge, resources and extensive global scale - both overall and specifically within the racing sector. We feel this union would provide an exciting and prosperous future for Codemasters, allowing our teams to create, launch and service bigger and better games to an extremely passionate audience."

-- If any dividend or other distribution is authorised, declared, made or paid in respect of Codemasters Shares on or after the date of this Announcement, Bidco reserves the right to reduce the offer consideration by the aggregate amount of such dividend or other distribution. If Bidco exercises this right to make such a reduction in respect of a dividend or distribution, Codemasters Shareholders will be entitled to receive and retain that dividend or other distribution.

-- It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act (or, if Bidco so elects, with the consent of the Panel, an Offer). The Acquisition is conditional on, among other things: (i) the approval of Codemasters Shareholders at the Court Meeting and the passing of the resolutions by Codemasters Shareholders at the General Meeting; (ii) the sanction of the Scheme by the Court; and (iii) approval from competition authorities in Germany and Austria. The Acquisition does not require the approval of EA Shareholders.

-- The Acquisition is expected to become Effective in the first quarter of 2021, subject to the satisfaction (or, where applicable, waiver) of the Conditions set out in Appendix I to this Announcement.

Further details of the Acquisition will be contained in the Scheme Document which is intended to be published along with notices of the Court Meeting and General Meeting and the Forms of Proxy within 28 days of the date of this Announcement, unless Codemasters and EA otherwise agree, and the Panel consents, to a later date. Subject to certain restrictions relating to persons resident in Restricted Jurisdictions, the Scheme Document will also be made available on EA's website at www.ea.com/codemasters-group and Codemasters' website at www.codemasters.com/investors/#electronic-arts.

This summary should be read in conjunction with, and is subject to, the full text of this Announcement (including its Appendices).

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