Glu Mobile soars 34% after Electronic Arts agrees to $2.4 billion takeover
Kevork Djansezian / Stringer
- Smartphone game developer Glu Mobile and Electronic Arts have agreed to a $2.4 billion merger.
- Glu Mobile developed the popular smartphone game, Kim Kardashian: Hollywood, among others.
- Shares of Glu surged as much as 34% on Tuesday following the takeover news.
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Glu Mobile surged as much as 34% on Tuesday after Electronic Arts agreed to acquire the mobile game developer for $2.4 billion.
Glu develops mobile games that include Design Home, Covet Fashion, and Kim Kardashian: Hollywood. The games are typically free to play but include in-game purchases.
The acquisition will help Electronic Arts make a broader push into the smartphone gaming market.
Andrew Wilson, CEO of Electronic Arts said, “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.
Glu shareholders will receive $12.50 in cash for each share, representing a 36% premium to Glu’s closing share price on February 5. The deal will be immediately accretive to Electronic Arts’ total net bookings, and is expected to grow underlying profitability in its first year.
With Glu shares trading slightly above the $12.50 offer price at $12.55 on Tuesday, investors are likely betting that either the bid might be increased or that another company may attempt to acquire the company, resulting in a bidding war.
According to Reuters, Glu Mobile received multiple takeover offers last year as its stock underperformed its gaming peers. The deal is expected to close in the second quarter and gives Glu Mobile an enterprise value of $2.1 billion.
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