Is game maker Electronic Arts an acquisition target of Apple, Amazon or Epic?
By Paul R. La Monica, CNN Business
All things considered, video game leader Electronic Arts is having a pretty decent year despite inflation worries, recession fears and other macroeconomic headwinds. EA Stocks (EA) were only down about 2% in 2022, a decline that isn’t as bad as the rest of the tech sector, which is now in bearish territory.
But there are concerns about EA’s future as the gaming industry consolidates.
Xbox owner Microsoft (MSFT) is buying Activision Blizzard (ATVI). Grand Theft Auto maker Take-Two Interactive (TTWO) has already snapped up mobile game developer Zynga.
Can EA stay independent as its peers continue to grow? There’s also growing competition from metaverse mobile game company Roblox and Fortnite maker Epic. Even Netflix (NFLX) has thrown its hat into the gaming arena.
EA has many lucrative franchises, such as the long-running Madden NFL games, a popular football series (soon to lose the FIFA brand), Apex Legends, and several Star Wars-related games.
And there’s been a lot of talk about EA being a good takeover target for deep-pocketed tech and media companies like Apple (AAPL), Disney (DIS), Comcast (CMCSA), or Amazon (AMZN). ).
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Is an acquisition in sight?
So will EA finally be bought out? The company was not immediately available for comment.
But EA has earned its own right and may be looking for other deals, especially ones that could bolster its mobile games division. EA made two such acquisitions in 2021, Glu for $2.4 billion and Playdemic (formerly owned by former CNN parent AT&T(T)) for $1.4 billion.
Goldman Sachs analysts believe there is about a 15% chance that EA could itself be acquired, “given increased levels of M&A activity in the video game space,” according to a recent report on the broader tech sector. It’s a small chance to be sure, but it’s bigger than zero.
Analysts have offered a potential valuation of $190 per share, which is “in line with recent video game transactions.” That’s nearly 50% above EA’s current share price.
Still, EA has enough quality content to justify going it alone for the foreseeable future.
Wells Fargo analyst Brian Fitzgerald noted in a report after EA’s latest earnings release in May that a “strong pipeline” (more games from EA Sports, more franchise updates) Sims, The Lord of the Rings and Bioware) as well as “accelerating mobile growth” were positive for the title.
So maybe EA doesn’t need to sell itself to a bigger company to stay competitive in the gaming world.
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