Bhatia: Bioware, Pandemic US$ 860 million price tag too high?

Although most analysts believe that Electronic Arts did the smart thing in acquiring Bioware and Pandemic Studios, it’s not surprising that some groups have questioned whether the price (to the tune of US$ 860 million) was too much. Case in point: Arvind Bhatia of Sterne, Agee & Leach.

Bhatia agrees that the acquisition was a smart move and his only concern was the price, which others have also found to be steep. While other analysts like Michael Pachter of Wedbush Morgan believes that EA will benefit in the long term, Bhatia agrees with UBS’s Ben Schachter: we’ll just have to wait and see.

We really like EA’s acquisition of BioWare/Pandemic, but the price paid on [the] surface seems high to us; more than $1 million per developer. That being said, if EA can generate mid-teens ROI or higher (as per its plan), the acquisition should be nicely accretive and worth the price. We may have to wait a few years to find out, though.

So analysts as a whole agree that Electronic Arts did the right move in acquiring Bioware and Pandemic Studios; the only difference is the degree of uncertainty over the price involved. However, EA’s stocks have risen significantly recently and everyone agrees it’s only a matter of time before we see if the deal will pay off; it doesn’t look like the company is in any immediate danger as of yet.

Via CVG

Although most analysts believe that Electronic Arts did the smart thing in acquiring Bioware and Pandemic Studios, it’s not surprising that some groups have questioned whether the price (to the tune of US$ 860 million) was too much. Case in point: Arvind Bhatia of Sterne, Agee & Leach.

Bhatia agrees that the acquisition was a smart move and his only concern was the price, which others have also found to be steep. While other analysts like Michael Pachter of Wedbush Morgan believes that EA will benefit in the long term, Bhatia agrees with UBS’s Ben Schachter: we’ll just have to wait and see.

We really like EA’s acquisition of BioWare/Pandemic, but the price paid on [the] surface seems high to us; more than $1 million per developer. That being said, if EA can generate mid-teens ROI or higher (as per its plan), the acquisition should be nicely accretive and worth the price. We may have to wait a few years to find out, though.

So analysts as a whole agree that Electronic Arts did the right move in acquiring Bioware and Pandemic Studios; the only difference is the degree of uncertainty over the price involved. However, EA’s stocks have risen significantly recently and everyone agrees it’s only a matter of time before we see if the deal will pay off; it doesn’t look like the company is in any immediate danger as of yet.

Via CVG