Eidos Ripe for Warner Takeover?

It’s no secret these days that video game publisher Eidos is struggling. We’ve already reported on potential buyout talks more than once. Recently, we even reported that Warner Bros. had taken the opportunity to bulk up on its stake in the troubled publisher, increasing its Eidos holdings to a total of about 20 percent. Now, it’s beginning to look more and more like Warner could be positioning itself to take a more active role in the day to day operations at Eidos.

The first sign pointing to a potential Warner takeover of Eidos is actually built on a foundation made of LEGO. Back in 2007, Warner first set things in motion to acquire Traveller’s Tales, the developer behind the hit LEGO Indiana Jones and LEGO Batman games. Earlier this week, while addressing investors at a conference in Arizona, Warner’s Chief Financial Officer John Martin called the acquisition “wildly successful”.

Martin also told the investors, “The games area is an area that intrigues us. That said, I don’t see anything right now of any scale that we’re going to go out and acquire. I think it’s going to be done incrementally.” At first glance, that might seem to put the kibosh on Eidos takeover rumors, however, take a closer look at Martin’s statement. The idea of “incrementally” increasing its position in the video game industry fits perfectly with the Eidos scenario. Warner already owns a fifth of the company. It wouldn’t take much more on Warner’s part to build a majority controlling interest, effectively giving Warner a fully functioning publishing/development house without the significant upfront cost it would take to snatch up some other studio. Simply put, Warner’s already got a vested interest in Eidos, so why not just build on that?

That leads to the second red flag signaling a possible Warner takeover: the money. Business analysts have been going bonkers over Warner lately, thanks to a deal in place which will see the company’s cable division splitting from the media giant. The deal, set to be completed in the first quarter of this year, would see Time Warner picking up a $10+ billion dividend from the cable division after the completion of the spinoff.

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