We’re just six weeks into 2022...
and we’re already experiencing the highest valued year for M&A in the history of the video game industry. Last week, Sony announced plans to acquire the Halo and Destiny gaming studio, Bungie, for $3.6 billion.
This multi-billion-dollar deal, while huge, doesn’t come close to the value of deals announced earlier this year. Two industry altering deals, with a total value of $81.4 billion hit headlines in January.
They’re Take-Two’s proposed acquisition of Zynga for $12.7 billion, and Microsoft’s proposed acquisition of Activision Blizzard for a whopping $68.7 billion.
These two mega-deals alone have nearly matched the entire dollar value of all 2021s M&A deals combined. As Forbes puts it, “The video game industry is going M&A crazy in 2022.”
But, as Forbes points out, consolidation within the industry comes with some risks. For example, the Microsoft deal has come under scrutiny by US regulators and the deal must go through full anti-trust review with the FTC.
It makes sense why. While consolidation could be good for business, and very good for investors, giant deals like these may be seen as anti-competitive, and could potentially hurt consumers.
And as a result, shares of Activision (ATVI) are trading near $80 a share, well below the buyout value of $95.
However, the likelihood of the deal getting approved does seem to be rather high. Nevertheless, investors are holding back, waiting for assurances. Should the deal be approved, ATVI will be worth $95 a share.
Now, acquisitions of smaller companies haven’t seen to come under the same microscope for obvious reasons. It’s why many savvy investors are turning to these smaller players, both publicly traded and private held, in hunt of acquisition gains.
In fact, Sony’s recent acquisition of Bungie may have come at an enormous premium.
Forbes asks, “Did Sony ‘Vastly Overpay’ For Bungie At $3.6 Billion?”
Early investors in Bungie certainly don’t think so!
In a year of M&A craziness, investing in the space could be a no brainier.
Discover the patented technology of a smaller gaming company, HERE
Or read more of the Forbes article, HERE