Microsoft’s recent court victory in the hearing over its proposed acquisition of Activision Blizzard has provided a significant boost to the entire videogame sector. As a result, investors are now looking at Electronic Arts (EA) and Take-Two Interactive Software (TTWO) as potential acquisition targets.
The ruling from Microsoft suggests that big technology and media companies will not face obstacles when it comes to acquiring videogame developers. This development has prompted hopes that more deals will soon follow.
According to analysts at Raymond James, led by Andrew Marok, major tech and media companies are likely gearing up their corporate development departments in light of Tuesday’s developments. In a research note, the analysts stated, “We expect the return of M&A premiums to other major publishers, including EA and TTWO.”
Following the news, EA stock surged over 5% on Tuesday, closing at $137.33, while Take-Two also experienced a 4.7% increase, reaching $150.75.
Although the analysts did not mention any potential buyers, it is anticipated that acquirers will be limited to the largest U.S. and global companies. Currently, EA has a market valuation of approximately $35.5 billion and is known for developing popular videogame series such as Madden and Battlefield. Take-Two, on the other hand, is valued at $24.4 billion and is recognized as the publisher of Grand Theft Auto.
Amazon’s Interest in EA Acquisition
Last year, there were rumors of Amazon.com (AMZN) being interested in purchasing EA, although neither company confirmed or denied the reports. At that time, EA’s stock was trading slightly higher, and industry analysts predicted that a competitive bidding process could raise its value to $188 a share.
Take-Two’s Growing Challenge
Since acquiring mobile game developer Zynga for $12.7 billion, Take-Two has become a more challenging target for acquisition. The company’s expanded portfolio now includes both major console brands and casual mobile games, making it a larger entity to be swallowed by potential buyers.
Potential International Buyers
Despite the hurdles, several international companies are already being mentioned as potential buyers. Sony (SONY) from Japan, known for its strong criticism of the Microsoft-Activision deal, might feel compelled to respond by considering an acquisition. Sony has already acquired Bungie, the creator of Halo, for $3.6 billion.
China’s Tencent Holdings (0700.HK), the world’s largest videogame company in terms of revenue, has been eyeing further overseas expansion due to the slowdown in the Chinese market. Last year, Reuters reported that Tencent is setting its sights on international growth.
