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10:16 AM · 29 August 2022

Amazon doesn't confirm EA acquisition offer

Electronic Arts
Stocks
EA.US, Electronic Arts Inc
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On Friday, August 26, news of a potential takeover bid for gaming company Electronic Arts (EA.US) by e-commerce giant Amazon circulated the markets, contributing to a several percent rally in gaming bulls. According to CNBC station sources, however, Amazon has no intention of making a takeover bid for the company: 

  • Electronic Arts shares gained more than 15 percent after news of a potential takeover although its exact terms were not known. The massive index declines of last Friday did not affect EA's stock, the company's shares rose more than ' 3% on Friday;
  • Both Amazon and EA itself addressed the news, dismissing media speculation. The companies chose not to comment on the wider market rumors;
  • Amazon, which has more than $37 billion in cash, intends to diversify its revenue streams beyond e-commerce and cloud computing. In August, among other things, it offered to acquire Roomba maker iRobot Corp for the dizzying sum of $1.7 billion. Earlier, Amazon also made an acquisition of healthcare provider One Medical for nearly $3.5 billion. Amazon has also extended its interest to the movie industry by making the acquisition of MGM studios
  • The tech giants could potentially be interested in acquiring EA Sports due to its strong licensing and protected intellectual property rights and also the growing potential of the 'Metaverse', which is ultimately expected to become a more immersive environment for gamers;
  • EA has indicated that it will not be fully recession-proof which may mean that 'BigTech' will only become interested in an acquisition when the company's valuation becomes more attractive.

Electronic Arts (EA.US) shares, D1 interval. Buyers managed to defend the level of the 200-session average on the daily interval, and the company's shares continue their upward trend by drawing higher and higher lows, which indicates growing demand. On the other hand, the company's resilience to the recession and the deteriorating climate in the gaming market may prove crucial in the medium term. Source: xStation5

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