U.K.'s block of Microsoft's acquisition of Activision Blizzard has thrown cold water on potential large deals in the videogame space, leading to a downgrade...
The blocking of Microsoft Corp.’s acquisition of Activision Blizzard Inc. by U.K. regulators has thrown cold water on any potential large deals in the videogame space, prompting one analyst to downgrade shares of Electronic Arts Inc.
In a Thursday note, BMO Capital Markets analyst Gerrick Johnson downgraded EA EA to market perform from outperform and reduced his price target on the stock to $125 from $150 to account for a reduction in the implied “takeout premium” for EA following the blocking of Microsoft’s MSFT $69 billion deal to buy Activision Blizzard ATVI .
When Microsoft made the offer for Activision back in January 2022, a little more than a week after Take-Two Interactive Software Inc. announced its $12.7 billion acquisition of Zynga, it kicked off an M&A frenzy, leading investors to wonder where the next big deal would be. “Now it has, and the test has not gone well,” Johnson said. “Spending has been pressured for both full games and [in-game monetization] as consumers’ budgets have compressed owing to inflation and interest rates. We expect this to persist.”
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