SEPT. 22, 2009 • Rumors on Wall Street suggest both THQ and Electronic Arts are take-over targets. Time Warner Inc., fast after its acquisition of Midway Games, is said to be the primary suitor for THQ. EA is said to be the target of Microsoft Corp. Many financial analysts cannot explain why there is substantial chatter about Microsoft acquiring EA, since they don’t see a good mix for either in the deal. Similarly, Microsoft issued a statement that it had no plans to acquire EA.
Impact: With stock prices of video game companies way off their highs of 2007 and 2008 the acquisition rumor mill is sure to startup in earnest. For many years it was speculated about whom would acquire Electronic Arts. However as the company’s valuation soared beyond $10 billion to as much as $20 billion it became more about whom would EA buy. Now Electronic Arts has crashed down to a $6 billion valuation so of course the rumors were bound to start again. THQ is a different story. The struggling publisher saw its market valuation plummet in early 2009 as its very survival was in doubt. However, by the end of September, THQ’s stock had tripled from its 2009 low to reach a valuation of almost $500 million. No matter what the current market value, our take remains that with current market conditions buying an established retail game publisher is a sucker bet.
