Berenberg lowers Codemasters to 'hold'

Berenberg stated that Codemasters reported "strong" first-half results on Monday but, with the takeover by Take-Two Interactive progressing and shares currently trading at a premium to the US firm's implied offer, it felt it prudent to downgrade its rating.

"We think the likelihood of a counteroffer is diminishing," said the analysts, who did also note that they do not believe that the takeover process will be "completely straightforward".

"Some also feel that the offer is based on FY 2021 numbers that are clearly too low, a view that has some merit after the H1 results," said Berenberg.

"As the board has recommended the offer, it is more likely than not that the deal will go through. But, given the spread of opinions, we feel it is not a foregone conclusion."

The German bank stated that the frustration it had encountered among shareholders meant there was "still a possibility" that Take-Two may have to raise its offer. However, Berenberg highlighted that this was a scenario on which it had only "limited visibility".

"While there may be more developments in the course of the takeover process, we choose to move to the sidelines."