EA has moved to acquire social and casual games specialist PopCap for a deal that could eventually be worth $1.3bn.
The publisher has bought the firm – best known for hit casual titles Plants vs Zombies, Peggle, Bejeweled and Zuma – for $650m in cash plus $100m in stock. PopCap's owners could pocket an additional $550m if the casual specialist generates significant revenue ($343m or above) for EA by December 2013.
The deal is part of a massive play from EA to become a bigger player on new platforms and in what it calls the ‘$1bn’ digital games business. PopCap’s games can be found largely on mobile phones, tablets, PCs and social networks, with 80 per cent of its revenue coming from these growing digital platforms.
That doesn’t mean retail is totally left out of the equation in this deal. Many of PopCap’s biggest hits are also available to buy on the High Street for multiple platforms. PopCap has partnered with Mastertronic and Focus Multimedia in the past for its retail releases. The company also licences its brands out for merchandising.
The deal is EA's most aggressive and expensive move in the casual and social games space yet. It follows the firm's acquisition of Facebook specialist Playfish for a deal worth around $400 million in 2009, meanwhile in October last year EA snapped up iPhone/iPad specialist Chillingo for a $17m, with the possibility of that rising to $30m.
“EA and PopCap are a compelling combination,” said EA CEO John Riccitiello. “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.”
PopCap boss David Roberts added: “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 deal is expected to go through this August. EA has increased its full year non-GAAP guidance due to the acquisition. It expects to make between $3,800m to $4,025m for the financial year 2012 (previous guidance $3.75 to $3.95 billion)
“PopCap has a proven financial trajectory with sustained revenue growth and double-digit operating margins,” said EA CFO Eric Brown. “On a non-GAAP basis, this deal is expected to be at least ten-cents accretive in fiscal year 2013.”