Electronic Arts, maker of the Madden football video games, agreed to buy rival Glu Mobile for $2.1 billion, obtaining titles like Kim Kardashian: Hollywood amid a surge in at-home play during the pandemic. Electronic Arts, based in Redwood City, Calif., will pay $12.50 a share for Glu Mobile, according to a statement Monday. That’s a 33% premium over the closing price of $9.39 in New York.
“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,” Andrew Wilson, chief executive officer of Electronic Arts, said in the statement. Gameplay has exploded with people trapped at home by the coronavirus, boosting growth for companies like Electronic Arts. They’ve supplemented that growth with acquisitions of rival companies and game studios.
Shares of Glu Mobile rose as high as $13.53 in extended trading, suggesting some investors believe a higher bid could becoming. Glu Mobile agreed to pay a termination fee of $78.9 million if the deal isn’t completed. Electronic Arts are coming off another takeover agreement, the $1.2 billion deal for Codemasters Group Holdings Plc, in December. In that transaction, it topped an earlier offer from Take-Two Interactive Software Inc. Codemasters, based in London, is known for its racing games.
The agreement “seems fair,” Wedbush Securities analyst Michael Pachter said in an email. The price for Glu Mobile “is just above the high a couple of years ago. EA gets good franchises and a solid pipeline and needed the help. I think it’s a good match and think it was smart for EA to use its cash to buy operating assets.”
The purchase of Glu Mobile will add more than $500 million in annual sales for EA, where revenue totalled $5.67 billion over the past 12 months. Shares of EA fell last week after the company’s fourth-quarter forecast fell short of estimates.