Microsoft's Activision deal ignites M&A talk in rival

[NEW YORK] Global gaming stocks are rallying after Microsoft's landmark US$69 billion takeover deal for Activision Blizzard, a move that could help enliven the technology sector after a cranky start to 2022.

US rivals Electronic Arts, Roblox, France's Ubisoft Entertainment and Poland's CD Projekt surged - some of them are being talked-up as potential acquisition targets.

The recent selloff in their shares and rising interest in gaming and the metaverse from megacaps such as Meta Platforms has raised expectations for more deals in the space. "If Microsoft can get them over the line without any antitrust issues, the rest are all in play," said Neil Campling, a tech analyst at Mirabaud Securities. "Electronic Arts would then be the most obvious takeout target."

Ubisoft is seen as the other potential target, but could be hurt by the family holding structure, according to Campling.

The Microsoft-Activision deal also follows Take-Two Interactive Software's offer for mobile game maker Zynga last week. "Both recent big deals show that market leaders are undervalued," said Piotr Poniatowski, analyst at MBank in an email.

"Microsoft deal shows also that subscription model is the future of gaming, which should support companies with large catalog of games." Microsoft shares traded 1 per cent down Tuesday in New York. "Acquiring Activision will help jump start Microsoft's broader gaming endeavors and ultimately its move into the metaverse with gaming the first monetization piece of the metaverse in our opinion," said Dan Ives, analyst at Wedbush securities.

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