* Square Enix to pay 32 pence a share cash, or 84.3 mln stg
* Square Enix delays Dragon Quest sequel, cuts profit view
* Eidos shares leap towards bid price, Square Enix falls
(Adds Square Enix results, background, updates shares)
By Mark Potter and Taiga Uranaka
LONDON/TOKYO, Feb 12 (Reuters) - Japanese video games maker Square Enix 9684.T agreed to buy the British firm behind titles such as 'Tomb Raider' and 'Championship Manager' for 84.3 million pounds ($120.8 million) to extend its reach in Europe.
Square Enix also said on Thursday it was postponing the latest sequel of its blockbuster game ‘Dragon Quest’ by nearly four months and slashed its full-year profit outlook.
Square Enix, which also makes 'Final Fantasy' role-playing games, said it would pay 32 pence a share in cash for Eidos EIDE.L, which has been hit by weaker-than-expected U.S. sales of 'Tomb Raider: Underworld', its latest game starring scantily-clad swashbuckler Lara Croft.
That is over three times Eidos' closing share price of 9 pence on Jan. 14, the day before the bid approach was announced. The deal turns up the heat on U.S. media giant Time Warner TWX.N, which owns 20 percent of Eidos and has been tipped as a potential bidder.
Time Warner could not immediately be reached for comment.
Shares in Eidos, which has sold more than 30 million ‘Tomb Raider’ games worldwide, more than doubled in value to 31.25 pence -- just below the offer price. At 1020 GMT, they were up 120 percent at 30.75 pence.
Eidos said reduced profit expectations meant it might have to enter talks with its lending bank over the June 2009 test of its financial position.
Square Enix shares closed down 6 percent at 2,040 yen before it announced nine month results and the deal with Eidos.
Square Enix said it was putting off the release of 'Dragon Quest IX' for Nintendo's 7974.OS DS handheld game console to July 11 from the originally scheduled March 28 due to "grave problems" in the software being developed.
It posted a 28.7 percent fall in operating profit to 12.77 billion yen ($141.7 million) for the nine months to Dec. 31 and said the figure for the year to March 31 would be about 12 billion yen ($133 million), 43 percent below previous guidance.
“Eidos maintains a strong reputation for high quality development and proven expertise in creating characters and storylines that appeal to consumers,” Square Enix President and Representative Director Yoichi Wada said in a statement.
“Eidos’ products are highly complementary to our business and will accelerate our aggressive expansion into Western markets.”
Square Enix said it had received undertakings in support of its bid from Insight Investment Management and Cazenove Capital Management, which together own about 13 percent of Eidos.
These undertakings will lapse if a third party tops Square Enix’s offer by at least 15 percent.
Square Enix said it would fund the deal from internal cash resources and expected it to close in April.
UBS is advising Square Enix, while Citi is acting for Eidos. (Editing by Kate Holton)
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