CNBC: Amazon Not Expected To Bid For Electronic Arts
August 26 (Reuters) Aug 26 (Reuters) Amazon.com Inc is not expected to make an offer for Electronic Arts Inc, CNBC said on Friday according to sources, disproving earlier reports that the online giant was set to make an offer today for the videogame maker.
EA shares rose 15% in premarket trading following the USA Today report on Amazon's takeover offer. The stock rose 4% in premarket trading, giving the company an estimated market value of more than $37 billion.
Amazon and EA stated that they don't make comments on rumors or M&A speculation.
Amazon, which has an untapped cash stash of around $37 billion, is on the acquisition route to diversify its business beyond cloud and e-commerce under its new Chief Executive Andy Jassy.
The company was willing to buy Roomba maker iRobot Corp at $1.7 billion in the month of March just a few days after it had agreed to purchase One Medical, a primary care provider for $3.5 billion.
Amazon, which also owns Twitch which is a videogame streaming service It also bought MGM studios, which produces "Rocky" films for $8.5 billion.
The firm's strong licenses, intellectual property rights, and the potential to create new games in the metaverse make it a desirable option for tech giants who want to grab attention from a younger audience analysts said.
Bets on the metaverse had also powered Microsoft Corp's $68.7 billion deal for EA rival and "Call of Duty" maker Activision Blizzard Inc in January https://www.reuters.com/article/activision-m-a-microsoft-idCAKBN2JS174.
The new deals are also blurring the distinction between personal computer and mobile gaming companies. This is happening against the background of a struggling global gaming industry as the pandemic-fueled rise in demand ebbs.
The global gaming market is expected to expand just 2% in 2022 from the previous year, data from research firm Newzoo revealed, a vast away from the 23% growth clocked in 2020.
EA has forecast sluggish adjusted sales figures, claiming it wasn't "completely immune" to the effects of recession.
Its shares lost about 3% by Thursday's close in comparison to Take-Two's 30 percent loss.