Eidos, the company behind the Lara Croft video games, today found itself at the centre of a potential bidding war when Entertainment Group, the British developer, trumped an offer made yesterday by Elevation Partners.

Elevation, the American private equity group which counts U2 singer Bono as a partner, had tabled a £71 million bid for the ailing company that created the popular Tomb Raider franchise.

Elevation's all cash offer, worth 50p a share, had been recommended by the Eido board, but SCI entered the fray this afternoon with a 53.6p-a-share all-share offer, valuing the company at £76.1 million.

The bids marked the end of an eight-month period where Eidos had sought a buyer without success.

The Eidos Board this afternoon said it would consider the SCI offer "in the light of its other alternatives".

Shareholders will wait to see if Elevation now improves on its first bid.

Jane Cavanagh, the SCI chief executive, said this was an "excellent opportunity for both Eidos and SCI shareholders to invest in a major computer games publisher" at a time of unprecedented growth for the gaming industry.

If successful, she said the deal would establish SCI as one of the largest publishers in the global video games market, estimated to be worth some £16 billion.

She also criticised Eidos’s current management, whose unsuccessful attempts to sell the company last year, coupled with the delayed launch of a raft of new products, saw the shares hit a 10-year low earlier this month.

"The poor share price performance of Eidos means that its existing share option schemes currently offer little motivation to its staff," she said.

Eidos has released five profit warnings in the past two years and has endured a damaging series of setbacks in the development and release of new games.

The proposed SCI offer would see existing shareholders receive one new SCI share in exchange for each six Eidos they currently hold, valuing Eidos at a 19.8 per cent premium to yesterday’s closing price.

Should the offer gain full acceptance, SCI would issue a maximum of 23.67 million shares. This would represent approximately 32.7 per cent of the enlarged share capital of SCI, or 82.8 per cent of its existing issued share capital. A total of £60.1 million worth of these new shares would then be sold at 300p a share, through a placing underwritten by broker KBC Peel Hunt, according to SCI.

SCI said it had "firm" or "tentative" acceptances from about 20 per cent of Eidos’s shareholders.

In early afternoon trade, Eidos shares jumped 27.4 per cent, or 12.25p, to 57p, while SCi stock was up 17p at 338.5p.

Elevation is led by John Riccitiello, former president and chief operating officer of Electronic Arts in the US, the world’s largest computer games company. He said his group’s offer was "in the best interests of Eidos shareholders, employees and customers".

Mike McGarvey, Eidos’s chief executive, yesterday said: "The board’s view is that it would be hard to find people with more expertise [than Elevation] to take the company forward.

He added: "Eidos is just not big enough to be a public company. We ran into a vicious circle where the timing of one title is the difference between a good result and a profit warning."

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