Acquisition game made simple

: Sony buys game publisher Electronic Arts

Abstract

The gaming market, with a market volume of $300.0 billion and 2.7 billion gamers worldwide, is driven by industry consolidation and megatrends. Video game industry leader Sony must react to defend its market position. Therefore, this thesis deals with the question whether an acquisition of the American game manufacturer EA by the Japanese technology company Sony makes sense and what is a reasonable offer price.Through the valuation of Sony, EA, and the combined companies, an offer price of $159.2 (premium of 32.6% over 02.05.2022 share price of $120.0) is set in a friendly takeover. The capital requirement of $49.7 billion will be paid by Sony 60.0% ($29.8 billion) through cash reserves and 40.0% ($19.9 billion) through newly raised debt.The acquisition results in total synergies of $25.8 billion. After deducting the premium and transaction and integration cost, synergies of $6.3 per 1.2 billion fully diluted shares remain outstanding to Sony's shareholders. The transaction is on average 12.4% accretive to Sony's shareholders and delivers significant value to both companies from a strategic and financial perspective.

Date of Award	29 Jun 2022
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	António Borges de Assunção (Supervisor)