Electronic Arts Inc stated on Monday that it would purchase Glu Mobile Inc for $2.4 billion, in addition to adding games such as “Design Home”, “Covet Fashion”, and “MLB Tap Sports Baseball”.
The U.S. video game developer has offered $12.50 per share in cash as part of the deal, which represents a premium of about 33% over the closing price of Glu’s stock on Monday.
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Electronic Arts (EA) stock surged an average of 1.4% in extended trading, while Glu shares soared an average of 34%.
The deal would give Glu an enterprise value of $2.1 billion and will get completed by June quarter.
San Francisco-based Glu received multiple takeover offers during 2020 due to the company’s underperformance relative to its peers’, a source with knowledge of the situation said.
EA will expand its portfolio of mobile game titles by acquiring Glu, which owns casual games such as Kim Kardashian: Hollywood, to attract more female gamers.
EA has been on an acquisition spree as it takes advantage of its strong balance sheet and attempts to expand with its gaming titles.
It bought the UK-based Codemasters company in December for $1.2 billion.
The U.S. videogames market hit a record $56.9 billion in sales last year, based on data from research firm NPD, as demand for virtual entertainment soared following the cancellation of major public events due to the new coronavirus.
Analyses of gaming revenue from Newzoo showed that it grew 13 percent last year, faster than the PC and console industry.
In the past few months, the video gaming industry has been marked by consolidations, including Microsoft’s $7.5 billion acquisition of ZeniMax Media and Swedish video game group Embracer acquiring Gearbox and Easybrain.
Earlier this month, EA raised its annual sales outlook, indicating that its sports games would do well, which included “FIFA 21” and “Madden NFL 21.”
EA was advised on the deal by J.P. Morgan, while Goldman Sachs, Morgan Stanley, and UBS Securities provided advice to Glu.