Broadpoint AmTech analyst Ben Schachter has said that Asian game companies are increasingly looking to the Western market for acquisitions.
Asian gaming companies, particularly in China, are well capitalized and would like to expand in the U.S. and Europe, says Schachter via Industry Gamers. "Compared with prior video game cycles, there is currently a relative abundance and diverse group of publicly-traded Asian video game firms operating across the continent, with the largest companies concentrated in China and Japan,” he said.
“During the past 10 years, investors have seen at least eight Asian online game companies (mostly in China) list their shares publicly for the first time, many on U.S. exchanges. The proceeds from these IPOs coupled with solid operating fundamentals (for some) and high profit margins (some Chinese online game operators have EBITDA margins in the 50-75% range) have left many of these companies with large net cash balances. We believe that several of these Asian companies are considering expanding/investing in Western markets, and thus represent potential acquirers for U.S. and European video game companies and publishers."
Schachter believes THQ and Take-Two "represent the most likely public company acquisition targets for Asian game companies."