EA's big acquisition shakes up the mobile game industry - PhoneArena

EA's big acquisition shakes up the mobile game industry

EA's big acquisition shakes up the mobile game industry
A big acquisition in the world of gaming has been announced. Electronic Arts, known for its console, PC and mobile game series such as FIFA, Battlefield, Apex Legends, The Sims, Madden NFL, Need for Speed, Titanfall, and Plants vs. Zombies, has signed a deal to acquire GLU Mobile for $2.1 billion. The latter has several popular mobile titles including Design Home, Covet Fashion, and MLB Tap Sports Baseball.

Electronic Arts looks to bolster its mobile games portfolio with its $2.1 billion acquisition of GLU Mobile

Under the terms of the transaction, GLU stockholders will receive $12.50 a share in cash for each GLU share that they own. That is a 36% premium to GLU's closing stock price on February 5th. On Tuesday, the stock closed above the $12.50 offer price at $12.67. After hours, the stock dropped 16 cents to $12.51. GLU stockholders will be voting on whether to approve the transaction, and regulatory approval is also required. Electronic Arts shares rose $3.65 to $146.11 during regular trading hours and added an additional 38 cents after-hours to $146.49.

The CEOs of both firms made statements on Tuesday. Electronic Arts' Andrew Wilson said, "Our acquisition of GLU combines amazing teams and deeply-engaging products to create a mobile games leader with proven expertise across many fast-growing genres. Mobile continues to grow as the biggest gaming platform in the world, and with the addition of GLU's games and talent, we’re doubling the size of our mobile business. With a deep IP portfolio and an expanding global audience, we’ll deliver more exciting experiences for our players and drive further growth for Electronic Arts." 

Nick Earl, CEO of GLU commented that "This transaction is the culmination of the tremendous work of the GLU team to deliver world-class interactive experiences for our players, while driving business momentum that has led to strong financial and operational results. It represents a terrific outcome for all of our stockholders and other key constituents. As part of Electronic Arts, we will continue capitalizing on the opportunities ahead in the expanding mobile gaming industry."

In a blog post, EA explained why it made the deal. The transaction will give Electronic Arts a portfolio of mobile games that spans several genres including RPG, lifestyle, casual, sports, and mid-core games. EA and GLU together will reach over 100 million players each month and will nearly double EA's monthly mobile bookings. The purchase of GLU Mobile is designed to give EA's mobile business a shot in the arm. For example, GLU brings to the combined company more than 500 best-in-class developers "with a mobile-first focus." Another 300 GLU employees will be joining the EA team.

GLU's fourth quarter revenue was up  32% on an annual basis to $141 million while net income soared 129% to $20.4 million. Earlier this month, Electronic Arts announced its fiscal third quarter revenue hit $1.67 billion for a 5% year-over-year gain. Net profit was $346 million, a 64% annual gain. But those numbers don't mean so much now that this deal has been announced. 

Consider what EA says in its press release/blog post about the future could bring once the acquisition closes. "The combination of Electronic Arts and GLU will be a mobile growth engine. With strong, recurring revenue across a leading portfolio of live services, strength in key mobile genres, a deep roster of owned and licensed IP, access to a large-scale and growing player network, and ability to reach into new regions and markets, the acquisition will be immediately accretive to EA's total net bookings and is expected to grow underlying profitability beginning in its first year."

EA also states that "Glu’s expertise in building and monetizing sports and casual mobile games, combined with Electronic Arts’ industry-leading IP in sports and beyond, will accelerate the creation of exciting new experiences for broad audiences."

If you enjoy playing mobile games, this is very good news indeed.
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