EA Could Be Up For Sale For $20 A Share
Author: William Usher
published: 2012-08-16 18:18:01
Rumors have begun to run rampant after the New York Post ran a story about one of the biggest publishing giants in the gaming industry potentially being up for sale for $20 a share. According to the New York Post report, KKR and Providence Equity Partners, the same firm behind Bethesda, are potentially interested in buying out EA, which is worth about $4.4 billion as of the publishing of this article.
The New York Post [via Develop] article keeps all names relegated as “sources” and even mentions that all of the involved parties of the potential buyout have declined to comment, which means that this rumor is only about as legit as the sources in the New York Post article.
Regardless, the speculation for the buyout centers around the fact that EA's been tanking both in their public image and their stock price. This is coupled with declining retail sales obviously due to the fact that there hasn't been any really heavy hitting titles out this year released on a consistent basis and the ones that have emerged have been mired in controversy (i.e., Mass Effect 3).
EA's quarterlies didn't look all too bad considering all the negative hoopla within the core gaming sector, but obviously the numbers for their Q1 2013 results were down compared to Q1 2012. While investors cued doomsday predictions and “Oh the gaming industry is dying” remarks, the more logical explanation was that gamers just weren't digging what EA was selling. Of course, investors don't think reasonably and if the buyout is true then they're probably under the impression that EA didn't try hard enough to milk enough sectors.
Right now, EA is focusing on an all-digital future while aiming to maintain their presence in the retail market. The company actually managed to make back some good will by suing Zynga, which ironically boosted up their stock price. Unsurprisingly enough, the rumors about EA being potentially bought out by KKR and Providence Equity also cued a spur in their stock by five percent, enabling the gaming giant's price to close out at a respectable $13.81 today, which is actually a repeat of what happened with their stock back when rumors ran rampant about Nexon buying out the publishing giant.
We'll keep you posted on if this turns out to be anything more than a publicity stunt to boost EA's stock portfolio or if a buyout is actually happening for real. For now, I'd take the buyout rumor with a grain of salt.
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