With its stock plummeting 17 per cent on the back of
, The Wall Street Journal
that EA’s falling value could make it a target for acquisition – and it has fingered Disney as a possible suitor.
EA is current worth around $7.3 billion – down from the $19 billion value it commanded a few years ago
WSJ writes: Any entertainment company could be interested in EA given continued growth in video game sales, the potential for cross-fertilisation with TV and film storylines, and advertisers’ interest in buying space in games.
Disney makes the most sense. EA’s biggest assets include its sports games, such as Madden NFL, which would fit with Disney’s ESPN cable network. Disney also could save at least part of the roughly $200 million it spends annually developing its own games.
Disney could afford it. At June 30, its net debt was $11 billion, roughly 1.2 times Pali Research’s estimate of 2008 earnings before interest, tax, depreciation and amortization. Also, Disney’s stock has massively outperformed EA’s this year. At a 40% premium, EA would cost $7.7 billion excluding the cash.
Disney would be gutsy to step up during the current economic uncertainty. But it might be better than waiting for better times and paying top dollar.”