Electronic Arts is reportedly considering an acquisition offer.
After years of struggling and with the mainstream videogame industry continuing to decline, publishing giant Electronic Arts is now rumored to be considering a buyout offer made by private equity firms KKR and Providence Equity Partners. Nothing definite is on the table at this point, with one source describing the discussions as “early days,” but with EA’s share price sliding from just over $25 in November 2011 to a low of under $11 in July, the company is apparently now at the point where it’s entertaining the possibility of an acquisition.
“They’ve made it known they’d do a deal at $20 a share,” another source said.
That mark is substantially less than the $26 per share EA offered to acquire Take-Two Interactive back in the heady days of early 2008, when its stock was still riding high at over $55. Take-Two rejected that offer, saying it undervalued the company, and struggled mightily and ultimately successfully against the acquisition.
EA’s share price has enjoyed a significant bounce over the past month, climbing from $10.95 on July 26 to $14.18 at the time of writing, although that’s still a far cry from its 2007 peak of over $61. Despite EA’s troubles and the predicted continuing decline of the conventional game industry, analyst Michael Pachter predicted that the company’s share price would more than double over the next 12 months, but whether that climb would be driven by an acquisition or would happen regardless of EA’s ownership situation wasn’t made clear.
Source: New York Post