Electronics Arts to buy PopCap for $750 million, could be as much as $1.3 billion
This acquisition is EA’s biggest, and it consists of $650 million in cash and $100 million in EA shares. PopCap can receive additional payments if they hit certain performance levels. For example, PopCap can get as much as $550 million if their earnings reach $343 million (before interest and taxes) for the two years ending in December 2013.
This deal will help EA push towards more profitable digital methods for delivering games. EA Chief Executive, John Riccitiello said, that the traditional packaged retail games won’t go away, but he expects digital forms of gaming to account for half of the global game industry revenues within the next few years.
The buyout is a no-brainer, but did EA pay too much? PopCap’s revenue was $100 million last year, but was profitable by double-digit operating margins. There is no question that this is considered a long-term deal because EA said it expects this acquisition to add at least ten cents a share to the company’s fiscal 2013 earnings. It has also been rumored that PopCap was courted by other companies, and Zynga might have been one of them.
SOURCE: TALK ANDROID