02-09-2021, 03:49 AM
Electronic Arts to buy Glu Mobile
<!-- SC_OFF --><div class="md"><ul> <li>Electronic Arts (NASDAQ:<a href="https://seekingalpha.com/symbol/EA?source=content_type%3Areact%7Cfirst_level_url%3Anews%7Csection%3Amain_content%7Cbutton%3Abody_link">EA</a>) is set to <a href="https://seekingalpha.com/pr/18183670-electronic-arts-to-acquire-glu-mobile-creating-new-global-leader-in-largest-and-fastest?source=content_type%3Areact%7Cfirst_level_url%3Anews%7Csection%3Amain_content%7Cbutton%3Abody_link">buy Glu Mobile</a> (NASDAQ:<a href="https://seekingalpha.com/symbol/GLUU?source=content_type%3Areact%7Cfirst_level_url%3Anews%7Csection%3Amain_content%7Cbutton%3Abody_link">GLUU</a>), offering a big expansion to EA's player network of half a billion-plus.</li> <li>Glu trading is halted for the news. <a href="https://seekingalpha.com/symbol/EA?source=content_type%3Areact%7Cfirst_level_url%3Anews%7Csection%3Amain_content%7Cbutton%3Abody_link">EA</a> is up 2.3% postmarket.</li> <li>The deal values Glu at $2.1B in enterprise value; Glu stockholders will get $12.50 in cash for each share - a 36% premium to Friday's closing.</li> <li>The combination means a mobile portfolio with more than 15 top live services with a combined $1.32B in bookings over the past 12 months.</li> <li>On closing, the deal is immediately accretive to net bookings, EA says, and is "expected to grow underlying profitability beginning in its first year."</li> <li><strong>Updated 4:26 p.m.</strong>: Glu will resume trading at 4:35 p.m.; Glu rival Zynga (NASDAQ:<a href="https://seekingalpha.com/symbol/ZNGA?source=content_type%3Areact%7Cfirst_level_url%3Anews%7Csection%3Amain_content%7Cbutton%3Abody_link">ZNGA</a>) is up 6.4% after hours.</li> <li>Source: <a href="https://seekingalpha.com/news/3659680-electronic-arts-to-buy-glu-mobile">https://seekingalpha.com/news/3659680-electronic-arts-to-buy-glu-mobile</a></li> </ul> <h1></h1> <p><strong>My commentary:</strong></p> <p>Glu is mobile games developer best known for, as they put it, games enjoyed by female gamers. Their main franchises include Diner Dash Adventures, Kim Kardashian Hollywood and Design Home. Although they also develop sport games that would compliment EA's portfolio well. Their sport games include Tap Sports Baseball, Deer Hunter and others. They also develop licensed games like WWE Universe and Disney Sorcerer’s Arena.</p> <p>We all know EA so I wont bother. However, important to know that recently EA is having some hard time. They lost Star Wars franchise exclusivity, their loot boxes are facing regulatory pressure in Europe and their first party IPs are recently failing. EAs biggest revenue driver is EA Sports live services revenue which in plain English are FIFA loot boxes. Also, with failing first party IPs EA is at a mercy of their sports games licensors. Not great position to be in. EA has also recently announced quarterly dividend which was understood by some analysts as indication of slowing growth. EA's other recent acquisition was Codemasters who are UK racing games developers. Codemasters games include Dirt, Grid and Colin McRae Rally. However, it seems like EA does not care much for Codemaster's original IPs. Instead they rather wanted to acquire Codemaster's F1 licensing deal. As they have admitted during the last investors call, they see great potential for monetizing F1 franchise in similar ways to FIFA games.</p> <p>Overall, markets seem to like EA's acquisition of Glu as shares are up post market. I'm more bearish on EA even with gaming sector growing at record speed. I think there are better game developers to invest in. Although, I will admit that current EA's valuation is quite tempting and dividend makes it even more so. Also, whether you like it or not if they manage to monetize F1 franchise and release more casual mobile games these acquisitions could be major revenue growth drivers.</p> <p>Edit: It seems like many investors are not happy with $12.50 per share offer which they believe significantly undervalues the company. On the other hand this sounds like done deal so not much to be done.</p> <h1></h1> <p>Edit: EAs strategic rationale for the acquisition includes: </p> <p>Creating a Leading Mobile Portfolio Across Key Genres. The complementary nature of Electronic Arts and Glu’s successful products will create a portfolio that spans many of the biggest and most popular genres of mobile games, including sports, RPG, lifestyle, casual, and mid-core games. The combined organization will have a demographically diverse audience, with significant opportunities for franchise and market expansion. </p> <p>Expanding Successful, Scalable Live Services. Both Electronic Arts and Glu have proven success creating mobile live service games that deeply engage large communities over many years and deliver strong recurring revenue. The combined expertise of the two organizations unlocks potential for further success. Glu’s franchises like Design Home, Covet Fashion, and MLB Tap Sports Baseball will benefit from Electronic Arts’ global licensing and distribution capabilities to bring them to new markets and more players. Glu’s expertise in building and monetizing sports and casual mobile games, combined with Electronic Arts’ industry-leading IP in sports and beyond, will accelerate the creation of exciting new experiences for broad audiences. </p> <p>Experienced Creative Leadership & Enhanced Team Capabilities. Glu brings a talented team including more than 500 mobile game developers (and nearly 800 total employees), adding significant scale to Electronic Arts’ mobile-focused organization. Glu’s creative leaders are established and well-known to Electronic Arts, with similar focus on creating highly successful mobile games with longevity. The combination of proven mobile leadership, deeply talented teams, genre expertise, long-running franchises and IP, and technology across the two organizations will be a catalyst to delivering new experiences and further growth. </p> <p>Accelerating Growth. The combination of Electronic Arts and Glu will be a mobile growth engine. With strong, recurring revenue across a leading portfolio of live services, strength in key mobile genres, a deep roster of owned and licensed IP, access to a large-scale and growing player network, and ability to reach into new regions and markets, the acquisition will be immediately accretive to EA’s total net bookings and is expected to grow underlying profitability beginning in its first year.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Ironleg01"> /u/Ironleg01 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/lfn127/electronic_arts_to_buy_glu_mobile/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/lfn127/electronic_arts_to_buy_glu_mobile/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><ul> <li>Electronic Arts (NASDAQ:<a href="https://seekingalpha.com/symbol/EA?source=content_type%3Areact%7Cfirst_level_url%3Anews%7Csection%3Amain_content%7Cbutton%3Abody_link">EA</a>) is set to <a href="https://seekingalpha.com/pr/18183670-electronic-arts-to-acquire-glu-mobile-creating-new-global-leader-in-largest-and-fastest?source=content_type%3Areact%7Cfirst_level_url%3Anews%7Csection%3Amain_content%7Cbutton%3Abody_link">buy Glu Mobile</a> (NASDAQ:<a href="https://seekingalpha.com/symbol/GLUU?source=content_type%3Areact%7Cfirst_level_url%3Anews%7Csection%3Amain_content%7Cbutton%3Abody_link">GLUU</a>), offering a big expansion to EA's player network of half a billion-plus.</li> <li>Glu trading is halted for the news. <a href="https://seekingalpha.com/symbol/EA?source=content_type%3Areact%7Cfirst_level_url%3Anews%7Csection%3Amain_content%7Cbutton%3Abody_link">EA</a> is up 2.3% postmarket.</li> <li>The deal values Glu at $2.1B in enterprise value; Glu stockholders will get $12.50 in cash for each share - a 36% premium to Friday's closing.</li> <li>The combination means a mobile portfolio with more than 15 top live services with a combined $1.32B in bookings over the past 12 months.</li> <li>On closing, the deal is immediately accretive to net bookings, EA says, and is "expected to grow underlying profitability beginning in its first year."</li> <li><strong>Updated 4:26 p.m.</strong>: Glu will resume trading at 4:35 p.m.; Glu rival Zynga (NASDAQ:<a href="https://seekingalpha.com/symbol/ZNGA?source=content_type%3Areact%7Cfirst_level_url%3Anews%7Csection%3Amain_content%7Cbutton%3Abody_link">ZNGA</a>) is up 6.4% after hours.</li> <li>Source: <a href="https://seekingalpha.com/news/3659680-electronic-arts-to-buy-glu-mobile">https://seekingalpha.com/news/3659680-electronic-arts-to-buy-glu-mobile</a></li> </ul> <h1></h1> <p><strong>My commentary:</strong></p> <p>Glu is mobile games developer best known for, as they put it, games enjoyed by female gamers. Their main franchises include Diner Dash Adventures, Kim Kardashian Hollywood and Design Home. Although they also develop sport games that would compliment EA's portfolio well. Their sport games include Tap Sports Baseball, Deer Hunter and others. They also develop licensed games like WWE Universe and Disney Sorcerer’s Arena.</p> <p>We all know EA so I wont bother. However, important to know that recently EA is having some hard time. They lost Star Wars franchise exclusivity, their loot boxes are facing regulatory pressure in Europe and their first party IPs are recently failing. EAs biggest revenue driver is EA Sports live services revenue which in plain English are FIFA loot boxes. Also, with failing first party IPs EA is at a mercy of their sports games licensors. Not great position to be in. EA has also recently announced quarterly dividend which was understood by some analysts as indication of slowing growth. EA's other recent acquisition was Codemasters who are UK racing games developers. Codemasters games include Dirt, Grid and Colin McRae Rally. However, it seems like EA does not care much for Codemaster's original IPs. Instead they rather wanted to acquire Codemaster's F1 licensing deal. As they have admitted during the last investors call, they see great potential for monetizing F1 franchise in similar ways to FIFA games.</p> <p>Overall, markets seem to like EA's acquisition of Glu as shares are up post market. I'm more bearish on EA even with gaming sector growing at record speed. I think there are better game developers to invest in. Although, I will admit that current EA's valuation is quite tempting and dividend makes it even more so. Also, whether you like it or not if they manage to monetize F1 franchise and release more casual mobile games these acquisitions could be major revenue growth drivers.</p> <p>Edit: It seems like many investors are not happy with $12.50 per share offer which they believe significantly undervalues the company. On the other hand this sounds like done deal so not much to be done.</p> <h1></h1> <p>Edit: EAs strategic rationale for the acquisition includes: </p> <p>Creating a Leading Mobile Portfolio Across Key Genres. The complementary nature of Electronic Arts and Glu’s successful products will create a portfolio that spans many of the biggest and most popular genres of mobile games, including sports, RPG, lifestyle, casual, and mid-core games. The combined organization will have a demographically diverse audience, with significant opportunities for franchise and market expansion. </p> <p>Expanding Successful, Scalable Live Services. Both Electronic Arts and Glu have proven success creating mobile live service games that deeply engage large communities over many years and deliver strong recurring revenue. The combined expertise of the two organizations unlocks potential for further success. Glu’s franchises like Design Home, Covet Fashion, and MLB Tap Sports Baseball will benefit from Electronic Arts’ global licensing and distribution capabilities to bring them to new markets and more players. Glu’s expertise in building and monetizing sports and casual mobile games, combined with Electronic Arts’ industry-leading IP in sports and beyond, will accelerate the creation of exciting new experiences for broad audiences. </p> <p>Experienced Creative Leadership & Enhanced Team Capabilities. Glu brings a talented team including more than 500 mobile game developers (and nearly 800 total employees), adding significant scale to Electronic Arts’ mobile-focused organization. Glu’s creative leaders are established and well-known to Electronic Arts, with similar focus on creating highly successful mobile games with longevity. The combination of proven mobile leadership, deeply talented teams, genre expertise, long-running franchises and IP, and technology across the two organizations will be a catalyst to delivering new experiences and further growth. </p> <p>Accelerating Growth. The combination of Electronic Arts and Glu will be a mobile growth engine. With strong, recurring revenue across a leading portfolio of live services, strength in key mobile genres, a deep roster of owned and licensed IP, access to a large-scale and growing player network, and ability to reach into new regions and markets, the acquisition will be immediately accretive to EA’s total net bookings and is expected to grow underlying profitability beginning in its first year.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Ironleg01"> /u/Ironleg01 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/lfn127/electronic_arts_to_buy_glu_mobile/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/lfn127/electronic_arts_to_buy_glu_mobile/">[comments]</a></span>Kind Regards R