By James Brightman
Nintendo’s stock has had a precipitous drop in the last few years. Back in the 2007-2008 timeframe, Nintendo shares were trading in the 60-70 range. As of right now, it’s down to 19.01. It’s at a six-year low following a sudden 3DS price cut and a big reduction in annual profit forecast. If the trajectory continues, it’ll be back down to Gamecube like levels, trading at 15 or below, and the question has to be asked: Will Nintendo become an acquisition target?
“As Nintendo’s share price continues to plummet, it is fair to ask if they are an acquisition target,” observed Panoptic Management Consultants CEO Asif Khan to IndustryGamers. “With a market capitalisation around $20 billion, there are a handful of tech companies that could afford to make an offer. Apple, Google, and Microsoft would be the leading candidates in my opinion. Another less likely outcome could be a merger with Panasonic or Sony as neither of those companies could afford to buy Nintendo outright.”
An alliance with Apple certainly would be interesting. Imagine all of Nintendo’s hot IP finally coming to iOS platforms. “I think a combination of Nintendo and Apple would be a force to be reckoned with for years to come,” said Khan.
And apparently Steve Jobs thinks so too. “I had a chance to speak with Steve Jobs at last year’s Apple shareholder meeting and asked him specifically if Apple would ever consider acquiring Nintendo,” Khan added. “They currently have $75 billion of net cash at Apple, so they are in an even better situation to make a bid for Nintendo. Jobs has been quite agnostic about video gaming for years but he did say that a strategic alliance, if profitable, would make more sense with Nintendo.”
Another interesting possibility could be Google, which may be pursuing gaming more heavily in the years ahead. “Google has been stealthily acquiring game companies left and right with more of a focus on casual gaming, but they are just crazy enough to make a bid for the Big N,” Khan said. “Although, acquiring Nintendo could preclude Google from making more acquisitions down the road due to antitrust concerns and constrained cash as a result of the purchase.”
And what about Microsoft? “It is obvious that Microsoft would benefit from the treasure trove of intellectual property at Nintendo, and they have the money to burn. They bought Skype for $8.5 billion and they aren’t even profitable,” stated Khan.
Is any of this likely to happen though? Analysts seem to agree that it would be very difficult for another company to pull off. “It is a near impossible acquisition, with the majority of shares controlled by a few shareholders,” stated Wedbush analyst Michael Pachter.
David Cole of DFC Intelligence remarked, “Nintendo suffered from the hot product syndrome where their stock soared because of the Wii and no real intrinsic change in their business. It pretty much quadrupled and now it has come back down to earth. Really it was a very inevitable process. However, I don’t see them as an acquisition target.”
He continued, “At their peak they had market cap almost double Sony. Now their market cap is fairly equal to Sony. So along with speculation about who will buy Sony we now get speculation about who will buy Nintendo. Really I think the market value of both companies is too high for almost anyone and it would be a messy process trying to merge. So we get speculation but it is just that.”
Khan also acknowledges that a Nintendo acquisition is not too likely… at least not for a few more years.
“All this is fine and dandy, but the bottom line is that Nintendo won’t sell unless they absolutely have to. Hiroshi Yamauchi owns about 10% of the company and the proud nature of Japanese companies would make an American acquirer difficult to accept. At 83 years old, Yamauchi won’t be around forever and it is unclear what his heirs would want to do with their stake after he passes. So perhaps there is a possibility of an acquisition down the road, but I wouldn’t bet on it. I don’t think it is likely that Nintendo gets acquired ahead of the Wii U release,” Khan said.
What do you think? Will Nintendo ever merge with another firm or get acquired?