The all-cash deal, which is slated 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 $12.50 in cash for each share of Glu, representing a 36% premium to Glu’s closing price Friday, EA said, adding that the transaction will immediately contribute to its net bookings.
“We did this deal because we believe mobile is the fastest-growing platform on the planet” for video games, EA CEO Andrew Wilson mentioned in an interview. “The combination of these two companies creates a market leader in lifestyle and sports.” DoorDash Gobbles Up Robotic Food-Prep Company Chowbotics
Mr. Wilson added that Glu will be able to build games based on EA’s intellectual property and take advantage of its marketing expertise and global presence to grow. Glu, which has about 800 employees, will be integrated into EA but continue to work independently on the games in its portfolio. “As successful as they’ve been, they haven’t had great international reach yet,” Mr. Wilson said. “This is an opportunity for us to help them unlock that door.”
EA is the second-largest U.S. gaming publisher by market capitalization after Activision Blizzard [$ATVI]. The game industry has benefited greatly over the past year from pandy-fueled demand for at-home entertainment, which caused a jump in investment and acquisition activity. Mobile games accounted for about half of the nearly $175 billion that consumers world-wide spent on gaming software last year.
Last week, both EA and Activision posted holiday-quarter results showing increased revenue and net bookings from a year earlier that exceeded the Street analysts’ predictions. On Monday, Take-Two Interactive Software [$TTWO] also reported increased revenue and net bookings for the December-ended quarter. Glu is set to report financial results from its most recent quarter this week. Ackman’s Pershing Square & Simons’s Renaissance Technologies Got Pieced Up In January
EA is best known for making console and PC 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 portion of the company’s net bookings. In the holiday quarter, typically the company’s most lucrative period, mobile net bookings grew 3% to $191 million and EA had more than 100 million monthly mobile players.
Glu, pioneered in 2001 as Cyent Studios and renamed later that year as Sorrent, went public in 2007. Chinese internet conglomerate Tencent Holdings [$TCEHY] is Glu’s largest shareholder, with a roughly 15% stake that it bought back in 2015.
The company, which solely makes mobile games, said it had 14 million monthly players in the September-ended quarter. Glu gained prominence in 2014 when it teamed up with reality TV star Kim Kardashian on her titular mobile game, which remains one of its most lucrative titles to date. Glu has also seen growth 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 already 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 Company, which produces a series of racing games.