Microsoft Looking To Acquire EA
"Theres talk that Microsoft might be interested in acquiring Electronic Arts. Its unsubstantiated chatter, but its out there," Frederic Ruffy, an options strategist at WhatsTrading.com in New York, told Reuters.
A London-based trader is also said to have cited similar talk doing the rounds in Europe.
Despite the chatter, Global Equities Research analyst Trip Chowdhry said that EA was not on Microsofts "radar screen" according to his industry contacts.
And Cowen and Company analyst Doug Creutz said in a note that the likelihood of Microsoft acquiring EA “is inconsequentially low”.
“EA derives over 30 per cent of its revenue from the Sony PS2 and PS3 and Nintendo Wii platforms, which would almost certainly disappear in the event of a Microsoft acquisition, since presumably the point of the acquisition would be to secure EA.s products as Xbox 360 platform exclusives,” he wrote. “EA derives another 10 per cent of revenue from the Sony PSP and Nintendo DS, which would conceivably also be at risk in the event of a Microsoft acquisition.
“In our view there is simply no way that Microsoft could make the math work due to the massive hit to EA’s revenue and earnings post-acquisition. This is even assuming such a deal would pass regulatory muster, which we find highly doubtful.”
EA has a market value of $6.5 billion and is frequently named by traders as a target for Walt Disney and Time Warner.
Rumors that a major media company is planning to make a bid for UFC and Saints Row publisher THQ saw the firms shares jump 13 per cent on Tuesday.