Blizzard of mergers
With Paris-based Vivendi SA about to close on its buyout of the majority of Activision Inc. (ATVI), Electronic Arts Inc. (ERTS), for now the world’s largest video game publisher, is poised for a more formidable rival. Together with Vivendi’s Blizzard, which publishes “World of Warcraft,” the world’s most popular online game, Activision Blizzard, will expand its product line and its reach in Asia. The combined company will be able to better compete with EA, which recently bought Hands-On Mobile Korea, a South Korean mobile game publisher.
Wedbush Morgan analyst Michael Pachter upgraded Activision ahead of the merger, which he expects to close by July 11. He notes shares trade above the deal price, but he expects the transaction to be approved by shareholders.
The outcome of Electronic Arts’ $2 billion offer for Take-Two Interactive Software Inc. (TTWO) is less clear. EA has not raised its offer price. “It’s not a done deal,” says Janco Partners analyst Mike Hickey. He notes Take-Two trades below EA’s offer price, signaling investors may be preparing for EA to walk away. Take-Two closed at $17.36 Feb. 22, before the offer became public. It has since traded between about $24 and just under $28. He says the price could drop closer to $20 if EA pulls out, “and it will give new investors an entry point.”
