Electronic Arts (EA) To Buy Glu Mobile (GLUU) For $2.1 Billion

By Amit Chowdhry ● February 8, 2021
  • Electronic Arts Inc. (NASDAQ: EA) and mobile game publisher Glu Mobile Inc. (NASDAQ: GLUU) recently entered into a definitive agreement under which EA will buy Glu Mobile for $2.1 billion in enterprise value.

Interactive entertainment leader Electronic Arts Inc. (NASDAQ: EA) and mobile game publisher Glu Mobile Inc. (NASDAQ: GLUU) have entered into a definitive agreement under which Electronic Arts will acquire Glu Mobile. As part of the agreement, EA will acquire Glu for $2.1 billion in enterprise value. Glu stockholders will receive $12.50 in cash for each share of Glu stock, representing a 36% premium to Glu’s closing share price on February 5, 2021. And upon closing, the acquisition will be immediately accretive to Electronic Arts’ total net bookings and it is expected to grow underlying profitability beginning in its first year.

This acquisition will immediately add significant scale to Electronic Arts’ mobile games business. And the combination of Electronic Arts and Glu creates a leading mobile product portfolio that includes more than 15 top live services across fast-growing genres with a combined $1.32 billion in bookings over the last 12 months. And bringing together the best-in-class mobile development teams at Glu and Electronic Arts’ mobile business with a collective portfolio of powerful IP in sports, lifestyle, RPG, casual and other genres, and leveraging Electronic Arts’ marketing and distribution strength to generate global reach, the combined organization will build on EA’s network of 430 million players, including more than 100 million monthly active players in mobile, and expand to new audiences and demographics all over the world.

This is the rationale for the acquisition includes:

1.) Creates a Leading Mobile Portfolio Across Key Genres – The complementary nature of EA and Glu’s successful products will create a portfolio that spans many of the biggest and most popular genres of mobile games, including sports, RPG, lifestyle, casual, and mid-core games. And the combined organization will have a demographically diverse audience, with significant opportunities for franchise and market expansion.

2.) Expanding Successful, Scalable Live Services – Both EA and Glu have proven success creating mobile live service games that deeply engage large communities over many years and deliver strong recurring revenue. And the combined expertise of the two organizations unlocks potential for further success. Glu’s franchises such as Design Home, Covet Fashion, and MLB Tap Sports Baseball will benefit from EA’s global licensing and distribution capabilities to bring them to new markets and more players. Plus 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.

3.) Experienced Creative Leadership & Enhanced Team Capabilities – Glu brings a talented team including more than 500 mobile game developers (and nearly 800 total employees), adding significant scale to Electronic Arts’ mobile-focused organization. And Glu’s creative leaders are established and well-known to Electronic Arts with a similar focus on creating highly successful mobile games with longevity. Plus the combination of proven mobile leadership, deeply talented teams, genre expertise, long-running franchises and IP, and technology across the two organizations will be a catalyst to delivering new experiences and further growth.

4.) Accelerating Growth – The combination of EA and Glu will be a mobile growth engine. And with 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.

The board of directors of each of Electronic Arts and Glu Mobile approved the transaction and the Glu board recommends that Glu stockholders approve the transaction and adopt the merger agreement. And under the terms of the agreement, Glu stockholders will receive $12.50 in cash for each share of Glu stock, representing an equity value of $2.4 billion, and a total enterprise value of $2.1 billion including Glu’s net cash of $364 million. The deal is anticipated to close in the quarter ending June 30, 2021, subject to approval by the Glu stockholders, the receipt of required regulatory approvals and other customary closing conditions.

KEY QUOTES:

“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.”

— Andrew Wilson, CEO of Electronic Arts 

“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.”

— Nick Earl, CEO of Glu

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.