Electronic Arts (EA -0.65%) has zoomed past rival Take-Two Interactive (TTWO -0.94%) to acquire U.K.-based video game developer and publisher Codemasters. On Monday, Electronic Arts and Codemasters both announced that the two companies agreed that the former will purchase the latter in a deal valued at $1.2 billion.

This will make it the largest acquisition in Electronic Arts' history.

Codemasters is currently traded on the London Stock Exchange. Its investors will receive a per-share payout of 604 pence, or just under $0.80, in the arrangement. U.K investors reacted to the news by trading that stock up to 656 pence (nearly $0.87), indicating a ringing endorsement of the agreement.

Gamer seated at a PC raising hands in triumph.

Image source: Getty Images.

With the deal, Electronic Arts leaps far over Take-Two, which last month agreed to pay 726 million pounds ($960 million) for the British company.

Codemasters is particularly strong in auto racing games. It owns the F1 (Formula One) and Dirt series of titles, among others. These would complement Electronic Arts' efforts in the genre, notably the Need for Speed franchise. 

In the press release about the deal, Electronic Arts CEO Andrew Wilson said, "With the full leverage of EA's technology, platform expertise, and global reach, this combination will allow us to grow our existing franchises and deliver more industry-defining racing experiences to a global fan base."

In the press release, Electronic Arts did not detail how it will fund the acquisition. As of Sept. 30, it held over $6 billion in cash and short-term investments. Its long-term debt stood at $552 million.

The company said that the boards of directors of both companies have recommended that shareholders accept the deal. EA believes the transaction will close by the end of Q1 2021.