The makers of Tomb Raider have been at the centre of a bid war

Eidos, best known for computer game icon Lara Croft, switched its allegiance to SCI Entertainment after it offered �103m ($193m) for the group.

This trumped the �71m offer from Elevation Partners, which kicked off the bid battle for Eidos last month.

Shares in Eidos were down 7.25 pence, or 9%, at 69.5p by Thursday's close.

The prospects for the enlarged group are very positive Jane Cavanagh, SCI chief executive Check the Eidos share price Check the SCI share price

A deal with SCI would create one of the largest firms in the UK games industry.

SCI's titles include the military-themed Conflict series of games, The Italian Job and The Great Escape.

'Key issues'

SCI has said buying its rival would help it to expand its own portfolio with multi-million selling franchises, and would also lead to cost savings.

"We firmly believe that our offer is in the best interests of both SCI and Eidos shareholders and Eidos employees," said SCI's chief executive Jane Cavanagh.

"The prospects for the enlarged group are very positive."

However, Eidos noted that shareholders may want to mull over a "number of key issues" before voting on the deal.

One of these issues is the fact that a merger between the two firms would not result in a significantly larger business, which could make it hard for the new group to compete effectively.

"Shareholders who do not wish to be exposed to such risks, or the potential volatility in the SCI share price, may wish to consider selling their shares for cash in the market," Eidos said in a statement.

But Eidos desperately needs a white knight. Its cash reserves dwindled to �11.9m during the second half of 2004 and pre-tax losses grew to �29m, while uncertainty over its future has led to several of its key staff leaving.

SCI's bid rival, Elevation Partners, was formed last year with the aim of investing in media and entertainment interests and is armed with a �520m war chest.

Eidos is obliged to pay Elevation, which has rock star Bono on its board of directors, a break fee of around �700,000 if the SCI offer goes through.