Eidos in the mood to buy

Games Virgin Interactive on shopping list.

Eidos was forced to admit it is on the acquisition trail amid a frenzy of speculation as to which companies are on the shopping list.

In a statement to clarify its position it revealed: 'The board of directors would like to make it clear that, along with other companies in the computer games industry, Eidos reviews many acquisition opportunities. It believes the computer games industry is in a period of consolidation and Eidos is determined to be one of the leading companies. Accordingly, a number of possible acquisitions are being considered.'

The likely acquisition targets include Rage Software, the troubled Psygnosis and Virgin Interactive. Rumours persist of a split between Sony and Psygnosis following the departure of Ian Heatherington, founder and managing director, and publishing director Nick Garnell. Virgin Interactive's parent company, Viacom, recently failed to reach an agreement with GT Interactive (PC Dealer, 17 June) and has been approached by Eidos before.

Industry watchers were cautious about the announcement. Some saw it as an attempt to reinforce Eidos' share price, which recently slumped from a high of 1262.5p to 800p.

A high share price would be vital for any acquisition as it would probably be partly funded through a stock swap.

Nick Gibson, analyst at Durlacher, said: 'I'd be wary of the statement. Eidos is a very acquisitive company, but its share price went into free fall recently. This statement will stem that fall. The games industry is at its all-time apex and every publisher is acquisitive and every developer is a potential target.'

Shares in Eidos climbed 75p to 845p following the statement. The results for the year ending 31 March revealed pre-tax profits of #16.5 million, recovering from the previous year's losses of #6.8 million. Sales climbed from #75.5 million to #137.2 million.