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Takeover Rumors Drive THQ Share Rally
by Leigh Alexander [PC, Console/PC]
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September 23, 2009
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THQ shares climbed 13 percent yesterday amid a swirl of Wall Street buzz suggesting the UFC 2009: Undisputed publisher could be the target of a takeover by big media.
According to the Wall Street Journal, rumors pegged Time Warner or Viacom as the most likely to make a grab for THQ. "We do think that both Time Warner and Viacom are interested in the gaming space," ThinkEquity analyst Atul Bagga told the paper.
They're more than interested -- they're already present. Viacom is parent of highly successful Rock Band publisher MTV Games, while Time Warner subsidiary Warner Bros. not only has its own interactive entertainment division, but recently completed its acquisition of Mortal Kombat house Midway.
That buy followed Warner's boost in its significant stake in Tomb Raider creator Eidos, an incremental buy-up that suggested it would try to acquire the publisher, a deal Square Enix ultimately accomplished.
Odds don't favor Time Warner, at least, making another games biz buy so soon after Warner Bros.' closing of the Midway deal, especially given the frequency with which the company pegs its game company acquisition plans as "incremental."
Viacom has long sustained a licensing relationship with THQ primarily via its Nickelodeon properties like SpongeBob Squarepants, but has recently begun boosting MTV Games' development staff internally while testing the waters of self-publishing Nickelodeon games, ahead of that deal's 2010 expiration.
Further, publishers become acquisition targets most often thanks to strong internal intellectual properties -- Mortal Kombat made Midway attractive to Warner Bros. even while it was saddled with millions in debt, for example. Game industry analysts generally agree that the most attractive takeover target in the business is publisher Take-Two, owner of the Grand Theft Auto cash cow, a highly visible slate of development talent -- particularly in Rockstar -- and other desirable franchises like BioShock plus a suite of successful sports games.
THQ, on the other hand, has received criticism from analysts in recent years due in part to its failure to establish a consistently resilient original IP, although thanks to the success of its fighting license titles like UFC, it's begun to see the fruits of recent cost-cutting measures, making an acquisition somewhat more feasible.
Analyst Brian Sozzi told the WSJ that a company like Viacom or Time Warner would pay $12 to $15 per share on the high end for THQ, which was trading at $7.46 as of market close yesterday after the surge.
Neither THQ, Time Warner nor Viacom have been willing to comment on the rumors.
[UPDATE: Later on Wednesday, another rumor reared its head: a possible acquisition of Electronic Arts by Microsoft. The rumor, classified as "unsubstantiated chatter" by an options strategist in a Reuters report, drove EA share prices upward.
One analyst told Reuters, "Our contacts just don't see Microsoft buying Electronic Arts, no synergies whatsoever, and also not Microsoft's corporate primary focus right now."
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http://www.reuters.com/article/innovationNewsTechMediaTelco/idUSTRE58M3CV2009092
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A takeover would be a great opportunity for a better-managed publisher to come in, clean house, and restart some of their library.
It would be like Belzebu buying Baphomet.
Or something like that...
It would be a HUGE moment in industry. Probably surpass the Nintendo/Sony divorce of the mid 90's, or Sega becoming a software developer, and the home console implosion of '83.
If MS pulled this off, it would be quite the coupe.
The diffrence that Nintendo/Sony divorce created two great consoles dinasties. Sega screwed gamers, and MS buying EA would result in the same (ie: gamers screwed).
We don't need even more monopoly, specially on corporations that do stuff like buy companies only to increase their monopoly (as some people know, Bungie was a MAC developer, now not anymore... and EA bought Renderware and told everyone that Renderware is crappy and they would not sell it, only to EA use it to make Burnout Paradise and The Sims 3, while Rockstar had to invent a new engine from scratch to their games).
This is dead... Yesterday a friend of mine told me that he tought that EA plan in buying everyone was to one day make EA titles exclusive to one console and have total control and monopoly of their stuff, maximizing profit in short term by pricing the way that they want among other things...
Unfortunally I see this rumor now today apearing, and confirming that maybe my friend is not wrong.
... everyone's happy then :)
Whatever.
As long as Relic is preserved in all its "RPG-RTS" greatness, like a delicious truffle that is to remain wrapped as the confectioner around it burns to the ground, than all will be well in the universe.
There is simply no way Microsoft is buying EA. It simply desn't make sense in any way. Meanwhile, the people who started the rumours have cashed in on their profits when EA shares shot up yesterday, and are probably on their way to some caribbean island with the loot and a hot blond.
A sucker and his money are soon enough parted from each other.
Sigh.
We never know... Disney bought Marvel, and it made no sense.