The GDC rumour mill had its finger on the pulse where Lionhead and Microsoft were concerned; Microsoft has acquired the British developer, beating out rumoured competition from EA and Ubisoft. It looks as though Microsoft were especially keen to grab Peter Molyneux -- they'll be putting his innovative approach to gaming to use on the Xbox 360 and Vista platforms.

This is good news for the struggling Lionhead, although whether it will help Molyneux's games sell any better is yet to be seen. As far as the UK games industry is concerned, international acquisitions like this (and Rare's before it) are interesting -- while there will always be smaller guys going it alone, there's a short supply of big-name British developers who are staying home-grown.

This article was originally published on Joystiq.

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