:max_bytes(150000):strip_icc()/GettyImages-2213757731-506f1e34dc814288974c7cf87d2c2476.jpg "Electronic Arts Is Going Private. Is Another Big Video-Game Buyout in the Cards?")
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Key Takeaways
- Some investors may be hunting for another possible big video-game stock that might get purchased after this week’s news of a deal for EA.
- Investors bid up shares of a few companies ahead of the confirmation of the EA deal; some analysts say not to expect another big buyout too soon.
Another big U.S. video game company is being bought out. That’s led investors to the inevitable question: Who’s next?
The latest big deal in the video-game business came Monday, when Electronic Arts (EA) said it agreed to be taken private for $55 billion. That followed the late 2023 closure of Activision Blizzard’s sale to Microsoft (MSFT), a buyout worth some $69 billion. Investors looking for the next one have two main domestic names to consider: Take-Two Interactive and Roblox.
Big U.S. game content companies have “scarcity value,” Jefferies analysts wrote Sunday before the EA deal was confirmed.
Why This Matters to Investors
When a big deal lands, investors often go looking for the next one, sometimes bidding up shares of companies viewed as similar to the latest to sell. That happened to some domestic video-game companies after the latest news about Electronic Arts—but there are reasons not to expect a follow-up deal in the immediate future.
Take-Two (TTWO), known for the “Grand Theft Auto” series, has seen its shares first rise, then cool a bit since late September, when news reports indicated that the EA deal was on the way. Take-Two’s market cap was recently around $48 billion, according to Visible Alpha, and the company’s been the subject of no shortage of rumors in recent years linking it to companies including Sony and Microsoft.
Jefferies this week wrote that unless a buyer offers a rich premium, it doesn’t expect Take-Two—with an expected, if delayed, blockbuster on the way in the next “GTA” game—to be “eager sellers.” And the company, which itself acquired mobile gaming company Zynga in a deal worth a bit less than $13 billion back in 2022, might be looking for acquisitions of its own.
“Our capital allocation plans definitely include paying down some of our debt over the next couple of years, but we also have a lot of acquisition opportunities available to us,” CFO Lainie Goldstein said during a February conference call, according to a transcript make available by AlphaSense.
Roblox (RBLX) is more a platform company than a publisher. Its shares have also risen, then retreated a bit in recent days, setting its market cap around $98 billion, according to Visible Alpha.
And anyway, who’s buying? Jefferies analysts expect the Big Tech companies that have in recent years been linked to gaming deals to be more concerned with AI investments; the sheer size of the EA deal might scare off other private-equity firms, they wrote, while other big content companies—perhaps Walt Disney (DIS) or Netflix (NFLX) are seen as ” less likely,” they wrote.
