Electronic Arts’ $2.4 bn Acquisition of Glu Mobile

By Lucy Chen (University of Melbourne) and Sally Marshall, Max Raso, Valeriya Shreyber (Imperial College London)

 

Overview of the deal


Acquirer: Electronic Arts (NASDAQ: EA)

Target: Glu Mobile (NASDAQ: GLUU)

Implied Equity Value: $2.4 billion

Total Transaction Size: $2.4 billion

Closed date: 30 June 2021 (expected)

Acquirer advisor: JP Morgan

Target advisors: Goldman Sachs, Morgan Stanley, UBS


In a move to broaden the scale of its mobile games business, game developer Electronic Arts announced on February 8 its agreement to acquire Glu Mobile. Under the agreement, Electronic Arts will pay $12.50 in cash for each share of Glu stock, representing an equity value of $2.4 billion and total enterprise value of $2.1 billion. The price represents a 36% premium to Glu’s closing share price on February 5.


WIth mobile now the biggest and fastest growing gaming platform, the acquisition will help Electronic Arts make a larger push into the smartphone market. Electronic Arts is expected to gain more mobile gaming titles and attract more female players through the deal, as well as expand its nearly half a billion strong player network to reach a more global audience. Upon closing, the transaction is expected to be immediately accretive to Electronic Arts’ total net bookings and grow underlying profitability at the beginning of its first year. The deal follows Electronic Arts’ recent purchase of UK-based video game publisher Codemasters for $1.2 billion.


“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.” - Andrew Wilson, Electronic Arts CEO

Company Details: (Acquirer - Electronic Arts)


Electronic Arts is a global leader in digital interactive entertainment and the second-largest gaming company in the Americas and Europe by revenue and market cap. The company is involved in developing and distributing games, content and services for consoles, personal computers and mobile devices. EA owns a portfolio of critically acclaimed brands such as ‘The Sims’, ‘EA Sports FIFA’, ‘Need for Speed’ and ‘Plants vs Zombies’.


Founded in 1982, headquartered in Redwood City, California

CEO: Andrew Wilson

Number of employees: 9,800

Market Cap: $41.95 billion (as of 17/02/2021)

EV: $36.32 billion

LTM Revenue: $5.54 billion

LTM EBITDA: $1.54 billion

LTM EV/Revenue: 6.56x

LTM EV/EBITDA: 23.55x


Company Details: (Target - Glu Mobile)