This deal is very significant.
biz.yahoo.com
It makes a takeover less likely by companies already established in the industry but makes the company a much stronger takeover prospect for entertainment giants wanting to break into this market. Without
trying to sound like a broken record...Time-Warner, Viacom, etc.
The numbers look pretty good...For roughly 3 million shares, ATVI
has gotten roughly $4.4 million in net income (I will assume this is
in U.S. dollars....always bad to assume, but...) and a broadened distribution network into the UK and Germany. Considering Europe represents about 25% of total company revenues, this push for stronger distribution can have a big impact on the bottom line. Not only does the company get revenue/income unassociated with ATVI products from these two companies, but ATVI also gets to push its products harder and with higher margins as mentioned in the release. I also like that these businesses will remain independent and will not be folded directly into ATVI which can be distracting for management.
If we tack on $4.4 million to net income for ATVI, and 19.2 million shares outstanding after dilution, that adds about $0.23 to the bottom line. If we assume that the distribution businesses deserve a P/E of roughly 15 (assume long-term growth rate of roughly 15%), then the $0.23 cents a share should add another $3-4 onto the stock. At least it's not a dilution.
Overall, ATVI looks like it is becoming a stronger, more balanced entertainment company and that can only bode well in the future, takeover or not.
Now for ATVI to broaden and solidify its console offerings and make sure it releases games of high quality and not full of bugs.
Tom C. |
