LONDON -(Dow Jones)- SCi Entertainment Group PLC (SEG.LN), maker of the popular Lara Croft Tomb Raider games, Thursday called off takeover talks with potential suitors and said it will take an operating loss for the 2008 fiscal year.
In an unexpected announcement after the market closed, the U.K.-based computer games developer said it had called off bid talks, after failing to receive a formal offer from any of the interested parties, saying it didn't believe the company would be sold for its full value at the current time.
"The Company is announcing today that the Board no longer believes that a sale of the company for its full value is likely to be achieved at the current time and has reached the view that it is not in the company's or its shareholders' interests to prolong these discussions further," it said in a statement.
"Therefore offer-related discussions have been terminated today," the company added.
However, SCi Entertainment, which publishes its games - including Kane and Lynch - under the more well-known Eidos Interactive brand, added that "certain commercial and strategic opportunities have emerged" from the bid discussions, which it will continue to explore. A spokesman for SCi declined to elaborate.
The London-based computer games maker also said Thursday that it now expects to take a full-year 2008 operating loss, after deciding to shift the release date of four of its titles into the fourth quarter following a review.
By moving the release dates of several titles - including the new Tomb Raider: Underworld game - into the more-lucrative 2008 Christmas trading period, the company said it would better optimize long-term value. However, in the meantime it may have to seek additional working capital.
The company now expects to release the four titles simultaneously on the six major gaming platforms in the buildup to Christmas to take better advantage of the strong sales period and combined marketing initiatives. Previously it had planned to release them in June on just three platforms - the PC, Sony Corp.'s ( SNE) Playstation 3 and Microsoft's (MSFT) Xbox 360.
SCi Entertainment - which has fallen on hard times since buying former FTSE- 100 rival Eidos for GBP76 million in an all-share offer in 2005 - now plans to release 10 titles over the remainder of 2008, including Conflict: Denied Ops and Warner Bros Wacky Races.
SCi Entertainment became a bid target last September, following a profit warning that saw its shares fall 18%. Following price drops in its Playstation 2 portfolio, due to strong competition from Nintendo Co. Ltd's (NTDOY) Wii and DS consoles, and Sony's own Playstation 3 launch, SCi warned in July that its full- year results would be hit. In September it confirmed it had swung to a full-year net loss of GBP29.1 million.
A number of rival game makers, including Electronic Arts Inc. (ERTS) and France's Ubisoft Entertainment (5447.FR), have been linked to the company. Time Warner Inc. (TWX), which owns a 10% stake in SCi Entertainment, was also rumored to be interested in gaining a greater share in the company, although all of these firms have declined to comment on the matter.
An analyst who asked not to be named speculated that takeover talks have hit a snag due to major shareholders and potential bidders failing to agree on a price for the company.
Chief Executive Jane Cavanagh owns a 5.6% stake in the company, while property magnet Robert Tchenguiz's investment vehicle Thorson Investments holds a 15.4% stake.
In a positive development Thursday, SCi Entertainment said it was pleased with Christmas sales, with its latest title Kane and Lynch selling 1 million units since launch in November.
"We anticipate a positive sales trend to continue through the remainder of FY08 and for Kane and Lynch to firmly establish itself as another key franchise for the Group," said the company in a statement.
SCi Entertainment's shares - which have fluctuated massively since the first bid approach in September - had already closed down 9%, or 13 pence, at 135 pence, prior to Thursday's announcement, which was released after the market closed.