America's second largest video game publisher Electronic
Arts Inc.(NASDAQ:EA) could be up for sale and has been approached by private
equity players such as KKR and Providence Equity Partners, the New York Post
reported on Thursday.
The NY Post quoted a source as saying that it was
early days yet and the talks had just begun.
Electronic Arts told the Post it would not comment on
rumour and speculation, KKR declined comment while Providence did not return
calls to verify the information.
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Electronic Arts is the developer of games properties
such as SimCity and Madden NFL. A source told the Post that Electronic Arts has made
it known that it would do a deal at $20 a share.
Shares in Electronic Arts, valued at $4.5 billion,
jumped the most in six months in early trades on Thursday and was up 8.7
percent at $14.23 on the takeover talks. Prior to this the stock had dropped 37
percent so far this year and has been buying back shares.
It looks like its consolidation time for the gaming
sector. Last year, EA's rival, Activision Blizzard also explored the
possibility of a sale but was not able to complete it.
The traditional video gaming industry is passing
through challenging times. It's been a long while since console makers such as
Microsoft and Sony released new versions of the PlayStation and the Xbox, and
there's not been too many new titles released for the console market.
Most game developers have been concentrating on games
for mobile devices and social networking sites since that is where the
customers are concentrating now.
Consumers are also buying fewer $60 games.
US sales of new videogames, consoles and accessories
fell 20 percent in July, capping a string of declines that have plagued the
industry since November. In total, sales fell to $548.4 million last month,
down from $686.3 million a year earlier, according to market researcher NPD
Group.
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