Codemasters stock price explodes higher after being acquired by Electronic Arts

Shares of Codemasters Group PLC (LON: CDM) soared 22.85% higher on Monday after the company accepted a bid worth around $1.2 billion from Electronic Arts.

Fundamental analysis: EA beats Take-Two 

Electronic Arts is acquiring the British video game developer Codemasters for about $1.2 billion in a deal that could give the American video game company lead in the racing video games market.

The reports about EA’s intentions to buy Codemasters came during the weekend, in which it was stated that Codemasters had a previously agreed deal of $970 million with Rockstar Games and Take-Two Interactive.

Codemasters has been developing games for nearly 40 years and is one of the oldest video gamemakers in the U.K. It is best known for developing its flagship racing video games including Grid, Dirt, Formula 1 and more. 

Once the deal is complete, Gran Turismo and Forza will become EA’s main rivals in the racing video games genre. The deal is expected to close in Q1 2021 for £6.04 ($7.98) per share.

“We believe there is a deeply compelling opportunity in bringing together Codemasters and Electronic Arts to create amazing and innovative new racing games for fans,” said chief executive of Electronic Arts, Andrew Wilson. 

“Our industry is growing, the racing category is growing, and together we will be positioned to lead in a new era of racing entertainment.”

On the other hand, the chairman of Codemasters Gerhard Florin said:

“Electronic Arts and Codemasters have a shared ambition to lead the video game racing category.”

Technical analysis: Codemasters stock price explodes 

As expected, Codemasters stock price erupted higher following the EA takeover news. Shares opened at 630p before racing even further higher to close at 656p, which is also a fresh all-time high for the stock. Overall, shares are up 22.5% today. 

Codemasters daily chart (TradingView)

On the other hand, Electronic Arts share price gained about 1.5% to trade at a 15-week high of $138.59. Interestingly, Take-Two stock price also made substantial gains to trade at a new record high of $203.69.

Summary

Electronic Arts announced it’s buying Codemasters in a $1.2 billion deal that would reinforce its position in the racing video game genre.

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