EA’s mobile push continues with $2.4bn Glu acquisition

April 2021 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

April 2021 Issue

Electronic Arts Inc (EA) has agreed to acquire Glu Mobile Inc for $2.4bn. The deal, which is expected to close in the quarter ending 30 June, pending shareholder and regulatory approval, will see Glu shareholders receive $12.50 in cash for each Glu share, a premium of about 33 percent to its closing price the day before the deal was announced. Glu has $364m in net cash.

The combination of EA and Glu will create a leading mobile product portfolio that includes more than 15 top live services across fast-growing genres. Glu is known for casual games, including many board game conversions, celebrity-themed games, sports games and many more. The typical Glu game is free-to-play and utilises microtransactions.

EA has said it expects the deal to grow underlying profitability in its first year, adding more than 15 Glu live services that combined to bring in $544m in bookings over the last year. By comparison, EA’s mobile titles brought in $779m combined over the same time frame.

The acquisition will help expand EA’s player base, as the company adds Glu’s more than 100 million monthly active players to its own network of 430 million players worldwide. EA also hopes to attract more female gamers through Glu’s casual game portfolio.

Glu employs nearly 800 people – 500 of them developers – with offices in San Francisco, Foster City, Toronto and Hyderabad. EA is not planning to shut down any of Glu’s games or layoff any employees in connection with the acquisition.

Glu is believed to have received multiple takeover offers in 2020 as its stock has historically underperformed those of its gaming peers.

“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,” said Andrew Wilson, chief executive of Electronic Arts. “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.”

“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,” said Nick Earl, chief executive of Glu. “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.”

EA has acquired a number of other software companies of late. The company purchased British videogame developer and publisher Codemasters in December 2020.

The COVID-19 pandemic has had a marked impact on videogame sales, particularly in the US where they reached a record $56.9bn in 2020, according to research firm NPD. Equally, global mobile gaming revenue grew by 13.3 percent last year, faster than PC and console gaming, data from analytics firm Newzoo showed.

Consolidation in the gaming industry has picked up speed over the last 12 months, with a number of notable deals, including Microsoft’s $7.5bn acquisition of ZeniMax Media and Swedish video game group Embracer buying Gearbox and Easybrain.

J.P. Morgan Securities LLC served as exclusive financial adviser to EA, while Simpson, Thacher & Bartlett LLP served as legal counsel. Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC and UBS Securities LLC served as financial advisers to Glu, with Fenwick & West LLP as legal counsel.

Richard Summerfield