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Acquisitions Roundup: EA, Reddit and AstraZeneca

Three big acquisitions to start your week.
(BigTunaOnline)
(BigTunaOnline)
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Electronic Arts is buying Codemasters Group Holdings for $1.2 billion, Bloomberg reports.

It Matters Because: This ends a bidding war that saw EA shell out nearly $300 million more than the next best bid from Take-Two Interactive Software (though some analysts arent convinced it’s over yet). Codemasters produces racing games, including the popular Formula 1 franchise. Video games are continuing to boom in the pandemic — industry revenue is up 20% this year to $174.9 billion, spurring a “flurry of deals” across the sector over the past year.

Reddit announced Monday it had purchased popular video-sharing app Dubsmash, though the deal’s terms were not released, WSJ reports.

It Matters Because: Reddit is now taking a stab at “one of the hottest corners of the internet: user-created video.” It’s Reddit’s first significant acquisition, which has grown to 52 million daily active users this year (up from 44% last year) and a $3 billion valuation as of its February 2019 funding raise. Dubsmash, which raised $20 million in 2019 and last had a valuation of $47.5 million in 2016, according to PitchBook data, has been downloaded almost 197 million times, per Sensor Tower. Not a bad starting point for Reddit to enter this market.

AstraZeneca agreed to buy Alexion Pharmaceuticals for $39 billion, Bloomberg reports.

It Matters Because: AstraZeneca has “built a turnaround on its strength in oncology” and this marks a shift into a new area for the company, immunology. It’s a lucrative field, but it exists primarily outside of AstraZeneca’s business, and there are “few synergies within existing operations.” Therefore, the deal potentially adds long-term risk as AstraZeneca combats eight-month lows on its share price and a challenging path to getting its Covid-19 vaccine to market.

Justin Oh:

Due to the “hit” nature of video games, I generally don’t love investing in video game development companies.

Reddit trying to bulk up their video capabilities to stay relevant is probably a smart play, although the outcome is binary. Either they succeed in integrating video meaningfully or it’s a failed experiment.

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