Electronic Arts to Acquire Glu Mobile in $2.4 Billion Deal
February 08 2021 - 4:43PM
Dow Jones News
By Sarah E. Needleman
Electronic Arts Inc. said Monday it is acquiring Glu Mobile Inc.
in a $2.4 billion deal aimed at growing an area of business in
which the videogame giant has had mixed success.
The all-cash deal, which is expected to close in the quarter
ending in June, will bring Glu's mobile games such as "Kim
Kardashian: Hollywood," "Diner Dash" and "MLB Tap Sports Baseball"
to EA. Glu shareholders will receive $12.50 in cash for each share
of Glu, representing a 36% premium to Glu's closing price Friday,
EA said, adding that the transaction will immediately contribute to
its net bookings -- a key industry sales metric that excludes
deferred revenue.
"We did this deal because we believe mobile is the
fastest-growing platform on the planet" for videogames, EA Chief
Executive Andrew Wilson said in an interview. "The combination of
these two companies creates a market leader in lifestyle and
sports."
Mr. Wilson added that Glu will be able to build games based on
EA's intellectual property and take advantage of its marketing
expertise and global presence to grow. Glu, which has about 800
employees, will be integrated into EA but continue to work
independently on the games in its portfolio.
"As successful as they've been, they haven't had great
international reach yet," Mr. Wilson said. "This is an opportunity
for us to help them unlock that door."
EA is the second-largest U.S. videogame publisher by market
capitalization after Activision Blizzard Inc. The game industry has
benefited greatly over the past year from pandemic-fueled demand
for at-home entertainment, which has led to a surge in investment
and acquisition activity. Mobile games accounted for about half of
the nearly $175 billion that consumers world-wide spent on
videogame software last year, according to estimates from analytics
firm Newzoo BV.
Last week, both EA and Activision reported holiday-quarter
results showing increased revenue and net bookings from a year
earlier that exceeded Wall Street analysts' expectations. On
Monday, Take-Two Interactive Software Inc. also reported increased
revenue and net bookings for the December-ended quarter. Glu is
slated to report financial results from its most recent quarter
this week.
EA is best known for making console and computer game franchises
such as FIFA and Battlefield. It has several popular mobile games
in its portfolio, including "Star Wars: Galaxy of Heroes," though
none are recent releases and mobile makes up the smallest -- and
slowest growing -- portion of the company's net bookings. In the
holiday quarter, typically the company's most lucrative period,
mobile net bookings grew 3% to $191 million and EA had more than
100 million monthly mobile players.
Glu, founded in 2001 as Cyent Studios and renamed later that
year as Sorrent, went public in 2007. Chinese internet conglomerate
Tencent Holdings Ltd. is Glu's largest shareholder, with a roughly
15% stake that it purchased in 2015.
The company, which exclusively makes mobile games, last said it
had 14 million monthly players in the September-ended quarter. Glu
gained notoriety in 2014 when it teamed up with reality TV star Kim
Kardashian on her eponymous mobile game, which remains one of its
most lucrative titles to date. Glu has grown partly through
acquisitions of popular games such as "Covet Fashion" and "Design
Home."
Glu's MLB title would add baseball to EA's sports portfolio,
which includes Madden NFL, NHL and UFC, among others.
EA has said it wants to more than double the number of gamers
that play its sports games over the next five years. The company is
working to close its purchase of U.K. studio Codemasters Software
Co., which produces a series of auto-racing games.
Write to Sarah E. Needleman at sarah.needleman@wsj.com
(END) Dow Jones Newswires
February 08, 2021 16:28 ET (21:28 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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