To: Tom Caruthers who wrote (701 ) 12/4/1997 4:28:00 AM From: Tom Caruthers Respond to of 1992
More stuff to ponder... Though still trying to digest all of the feedback from Heavy Gear, I dug this up from Multimedia Wire: Activision Rumors Reflect Fluid State of Industry The uncertainty over Activision's [ATVI] direction appears to be in line with the rapid pace of mergers and acquisitions within the industry. It also may illustrate the role personality plays in the process. Activision is back in the M&A spotlight, but despite this week's announcement of two acquisitions, rumors persist it soon may be an acquisition target itself. "Everyone's talking to everyone in this sector, both as an acquirer and as an acquisition [target]," Wedbush Morgan analyst James Lin says. Activision has grown in the last few months, with a string of acquisitions, including developers Raven Software and Redline Games. The company's latest purchases were two European distributors, revealed Monday (MMW, Dec. 2). Although it recently was a buyer, rumors persist that Activision may soon be sold, perhaps to Electronic Arts [ERTS]. "They're a very attractive takeover target because of their distribution and their relationship with id Software," developer of Quake and Activision's new Quake II, Individual Investor Group analyst Aaron Edelheit says. Despite its appeal, one key obstacle stands in the way of an Activision takeover: Chairman/CEO Bobby Kotick, many say. "We continue to understand from Bobby he doesn't want to do it," asserts Dean Frost of Frost & Berman, which tracks mergers and acquisitions for MMWIRE. For the 1997 fiscal year ended in March, Activision reported $7.1m profit on $86.5m in sales. That performance means Kotick probably has the loyalty of most shareholders, Frost says. But Activision "still doesn't have critical mass, which is probably why you're hearing these rumors," he adds.