April 28th, 2008 by Arjan Olsder Posted in Companies & M&A | No Comments »
Last week we reported on the news that Warner Bros has made a strategic investment in Eidos / SCI. A few days after, it seems like investors in SCI aren’t impressed.
On the opening day after the news, SCI shares sunk another 17% in value. Wedbush Morgan analyst Michael Pachter is even questioning the sense behind the deal.
"None of this really makes all that much sense to me," he told GamesIndustry.biz. "Warner is doubling down for less money and SCi gets a temporary boost. It isn’t clear to me that this is enough cash for more than a year and a half of operations. It doesn’t appear strategic at all, since all Warner Bros gets is a larger minority interest in a weak company, and they don’t benefit in any meaningful way from the distribution deal."
DFC Intelligence analyst David Cole is even talking about a possible acquisition; "Warner does not have a major position in the game business and usually buying struggling companies in need of a turnaround is not a good strategy for building a new market position," he told GamesIndustry.biz. "A minority investment and partnership is a chance to get a better foothold in the market without taking on a big potential downside. If things work out they would be in the best position to make a full acquisition."
Click on the GamesIndustry.biz to read the full interviews.
