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.