Will these 4 companies get into a bidding war over Electronic Arts?
The monthlong rumors that Electronic Arts (EA) is shopping itself around the market as a potential buyout/merger target has reached a fever pitch.
Puck.news, a website “focused on the inside story at the nexus of Hollywood, Wall Street, Washington, and Silicon Valley” says the company is indeed pursuing a sale and has talked with Disney, Amazon, Comcast-NBCUniversal and Apple.
Puck’s report said that according to “rumors”, EA was closest to a deal with Comcast, but the deal fell apart over disagreements on price and structure.
“The general terms of the proposal, which lawyers, and bankers for both sides negotiated for several weeks, would have seen the Roberts family (Comcast) take majority control of the combined entity”, said Puck’s report.
Comcast has declined to respond to the report saying it would not comment “on rumors and speculation relating to M&A.”
In the face of the mega-deal between Microsoft and Activision Blizzard, EA has “only grown more emboldened in the wake of the Microsoft-Activision deal”, said Puck.
Since the beginning of May, as rumors began to swirl, the stock price of Electronic Arts (NASDAQ: EA) has rocketed up roughly 22%. Should any deal happen, much of the premium (if any) may have already been built into its stock price.
However, should Amazon, Disney or Apple truly be interested in an acquisition, there may still be plenty of upside.
With the video game industry performing so well, seemingly regardless of macroeconomics, even more M&A deals, beyond the rumored EA deal, could be in the works. Last year, $85 billion in gaming industry deals occurred. This year, we’re expected to see $150 billion.
Now may be the time for individual investors to take advantage of the M&A frenzy. Owning shares in gaming companies could mean strong buyout premiums if an acquisition occurs.
But even without acquisitions, the industry is strong and still growing.