EA Acquires is expanding to the mobile gaming space.
EA acquired US-based mobile game developer Glu Mobile. The deal took place for $2.1 billion in enterprise value and $2.4 billion in equity value. The price includes a 36% premium to Glu’s closing share price on February 5th. Glu Mobile has a wide variety of gaming portfolios in the mobile space ranging from sports, casual, RPG, lifestyle, and mid-core genres. The acquisition is scheduled to take place in Q2 of 2021 with cash on hand.
The deal is looking quite promising for as it will help stabilize its traditionally hit-driven financial performance. The acquisition of Glu Mobile will help to stabilize its revenue stream on a quarter-to-quarter basis. Though the acquisition will increase it’s revenue moderately i.e. 10% it clearly shows the scope of mobile gaming efforts.
Moreover, this acquisition means that will get an add-on of 780 employees. These employees are skilled in mobile development which means that mobile gaming development will scale massively. Both Mobile have a ton of experience in mobile gaming. And combining both forces will cause a great deal of development in the mobile space.
Glu’s financial revenue
Glu’s financial revenue shows steady growth with reported earnings of $540.5 million in 2020. The majority of the earnings are generated in the US via the App Store and Google Play. App Store contributed 56.5% in sales while Google Play added 33% of sales in 2020. Based on Glu’s annual 2020 results, the transaction multiplies are 3.9x EV/Revenue, 71.2x EV/EBITDA, and 27.5x EV/adj. EBITDA.
This deal is another sign that top guns in the business have already stepped up their approach to Merger & Acquisition. The M&A landscape in the gaming industry is clearly becoming more competitive and a whole lot of big investors are still waiting on the sidelines with their billions. Just a couple of months ago the company entered into an agreement to acquire Codemasters Group for $1.2 billion. It is still expanding and accelerating its M&A approach, will others in the industry follow suit, wait and see.