Three weeks ago, the gaming industry was abuzz with reports that some bigwig, is planning to take over the makers of huge titles like Bejeweled and Plants vs. Zombies, and EA was being considered the front runner. Putting the rumors to rest, EA announced yesterday that it will indeed acquire casual game developer PopCap Games in a deal expected to be worth 750 million USD.
EA will pay PopCap Games a sum of approximately 650 million USD in cash while the remaining 100 million USD will be issued in the form of common stock to certain stockholders of PopCap. Other than that, EA will also give the developers additional variable cash consideration depending on the achievement of certain non-GAAP earnings before interest and tax (EBIT) performance milestones through December 2013.
“EA and PopCap are a compelling combination. PopCap’s great studio talent and powerful IP add to EA’s momentum and accelerate our drive towards a $1 billion digital business. EA’s global studio and publishing network will help PopCap rapidly expand their business to more digital devices, more countries, and more channels,” commented EA CEO, John Riccitiello.
About 80 percent of PopCap’s revenues in 2010 were derived from digital and social games on platforms like Facebook, RenRen, Google, iPhone, iPad and Android. And it was only in May this year that EA moved towards the digital market with franchises like EA Sports and Battlefield. While the exact earn out calculation can vary, EA will apparently pay about 50 million USD in long-term equity retention awards to PopCap employees.
David Roberts, CEO of PopCap, shared, “We picked EA because they have recast their culture around making great digital games. By working with EA, we’ll scale our games and services to deliver more social, mobile, casual fun to an even bigger, global audience.”
The 750 million USD deal between EA and PopCap is certainly expected to create waves in the gaming industry. This also adds to EA’s growing list of acquisitions which include Chillingo, Firemint, Playfish and more. And for now it seems as if its acquiring spree may take a break after this huge deal.