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ELECTRONIC ARTS INC. 8-K Report, Acquisition Completed (Aug 12, 2011)

Filed August 12, 2011For Securities:EA

Summary

This Form 8-K filing by Electronic Arts Inc. (EA) on August 12, 2011, announces the completion of its acquisition of PopCap Games, Inc. The acquisition was finalized on August 12, 2011, for a total consideration of approximately $645 million in cash, 4,356,144 shares of EA common stock issued to PopCap's founders and CEO, and up to $50 million in long-term equity retention awards for PopCap employees joining EA. Additionally, EA may owe up to $550 million in performance-based cash consideration contingent on certain milestones through December 31, 2013. The cash portion of the acquisition was financed through proceeds from EA's convertible senior notes offering completed on July 20, 2011, and existing cash reserves. The issuance of EA common stock to PopCap's key personnel was conducted as a private placement under Section 4(2) of the Securities Act, based on accredited investor representations. Investors should note that detailed financial statements for PopCap and pro forma financial information related to the acquisition will be filed as an amendment within 71 days.

Key Highlights

  • 1Electronic Arts Inc. (EA) has completed the acquisition of PopCap Games, Inc.
  • 2The total acquisition price includes approximately $645 million in cash and the issuance of 4,356,144 shares of EA common stock.
  • 3An additional $50 million in long-term equity retention awards (restricted stock units and options) are to be granted to PopCap employees.
  • 4EA may pay up to $550 million in additional performance-based cash consideration through December 31, 2013.
  • 5The cash component was funded by proceeds from EA's recent convertible senior notes offering and existing cash.
  • 6The stock portion was issued privately to PopCap's founders and CEO under an exemption from registration.
  • 7EA will file PopCap's financial statements and pro forma information via amendment within 71 days.
  • 8The acquisition is expected to significantly expand EA's digital and mobile gaming portfolio.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce the completion of Electronic Arts Inc.'s (EA) acquisition of PopCap Games, Inc. It details the terms of the transaction, including the consideration paid and the financing methods used.

The total consideration includes approximately $645 million in cash, 4,356,144 shares of EA common stock issued to PopCap's founders and CEO, and up to $50 million in long-term equity retention for PopCap employees. Additionally, there is a potential for up to $550 million in performance-based cash consideration contingent on future milestones.

The cash portion of the acquisition was funded by proceeds from EA's 0.75% Convertible Senior Notes offering completed on July 20, 2011, and EA's existing cash on hand. The stock consideration was issued as a private placement.

EA has stated that it will file the required financial statements for PopCap and pro forma financial information related to the acquisition by amendment no later than 71 calendar days from the filing date of this report (August 12, 2011).