Goldman Sachs expects a 25% increase in mergers and acquisitions in the United States this year.
The investment firm expects the incoming government of Donald Trump to be significantly more business-friendly. And this will translate to increased dealmaking in 2025, according to Goldman Sachs.
In particular, its experts are convinced that two gaming companies: Unity Software Inc. and Electronic Arts Inc. could be takeover targets under Trump 2.0.
Electronic Arts Inc (NASDAQ: EA)
Electronic Arts has been in a sharp downtrend over the past two months.
Its shares have lost more than 15% since late November – a sell-off that’s made the company’s valuation a lot more attractive for a potential buyer interested in boosting its portfolio with renowned titles like Battlefield, FIFA, and The Sims.
EA stock is currently going for the same price it traded in early 2021.
About 90% of Electronic Arts is currently under institutional ownership, which could help streamline the takeover process.
While the share price performance hasn’t been exciting, EA’s financials are another story.
In its latest reported quarter, the video game company earned $1.11 a share on $2.03 billion in revenue.
In comparison, analysts were at 89 cents per share and $1.98 billion, respectively.
More importantly, the gaming industry is broadly expected to grow further in the years ahead. Electronic Arts, with its diverse range of games and services, looks well-positioned to capitalize on that growth.
So, attractive valuation, solid financials, and exciting growth potential make EA an attractive takeover target in 2025.
Unity Software Inc (NYSE: U)
Unity could also attract potential buyers this year but for different reasons.
The video game software development company faced significant backlash last year over introducing a controversial “runtime fee”.
The new policy would have charged developers each time their game was installed.
However, the developer community strongly opposed the change, leading Unity Software to eventually scrap the runtime fee.
The whole fiasco damaged its relationship with developers and catalyzed a concerning 45% decline in the company’s share price.
Unity had to lower its headcount by 25% to refocus on profitability as well.
The New York-listed firm ended its latest reported quarter with $125 million in net loss. In a letter to shareholders, its executives acknowledged the significant financial and operational challenges and emphasized the need for a culture of execution and discipline.
So, given the ongoing struggles, it’s reasonable to believe that Unity’s management might consider seeking a potential buyer this year – and investors could see a merger or acquisition as a means of potentially improving the company’s prospects as well.
Note that U once traded at nearly $200 versus $22 only at writing.
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