Microsoft In Final Stages Of Acquiring LionHead?

Joystiq are reporting that there are rumours floating about at the GDC that hint at Microsoft and Lionhead are in the final stages of negotiating an acquisition deal that would welcome Peter Molyneux’s development studio into the castle of Microsoft’s gaming family. Well-placed sources in the development industry claim that the two companies are in the final stages of negotiation and may announce the deal within the coming days. Lionhead boss Peter Molyneux’ supposed attempts to sell the studio have been the subject of speculation for several years – with stock market flotation known to be under consideration at one point, while more recently the firm has been attached to possible suitors including Elevation Partners, Electronic Arts, Ubisoft and Microsoft.

Now it would appear that this saga is finally reaching an end, with Microsoft – publisher of the studio’s only successful console title, Fable – closing in for a final bid, while Ubisoft, the other company reportedly left in the negotiations, has been left on the sidelines. “Ubisoft are furious,” one insider said at GDC, “they thought they had it in the bag.” Was the 20% cut of Lionhead’s workforce early this month the beginnings of this deal?