8-KMaterial AgreementsRegulation FDOther Events+1

ELECTRONIC ARTS INC. 8-K Report, Material Agreement (Feb 8, 2021)

Filed February 8, 2021For Securities:EA

Summary

Electronic Arts Inc. (EA) announced on February 8, 2021, its entry into a definitive agreement to acquire Glu Mobile Inc. for $2.4 billion in cash, representing an enterprise value of $2.1 billion after accounting for Glu's net cash. This strategic move is expected to significantly bolster EA's mobile gaming portfolio by integrating Glu's popular titles and talented development teams. The acquisition is subject to customary closing conditions, including regulatory approvals and Glu's stockholder approval. EA has also secured a voting and support agreement from a significant Glu shareholder (approximately 12.1% ownership), ensuring support for the transaction. The company anticipates that this acquisition will enhance its growth in the expanding mobile market and expand its reach to new player segments.

Key Highlights

  • 1EA enters into a Merger Agreement to acquire Glu Mobile Inc. for $2.4 billion in cash.
  • 2The acquisition is valued at an enterprise value of $2.1 billion, including Glu's net cash of $364 million.
  • 3The transaction is structured as a merger where Glu will become a wholly owned subsidiary of EA.
  • 4Closing conditions include Glu stockholder approval, antitrust approvals (Hart-Scott-Rodino and Austrian), and absence of material adverse effects.
  • 5EA has secured a Voting and Support Agreement from a key Glu shareholder representing approximately 12.1% of voting power.
  • 6Glu's outstanding stock options and restricted stock units will be treated as per the Merger Agreement, with vested awards converted to cash and unvested awards assumed by EA.
  • 7The Merger Agreement includes customary representations, warranties, and covenants, with provisions for termination fees under specific circumstances.

Frequently Asked Questions

The acquisition represents a $2.4 billion cash transaction, valued at $2.1 billion enterprise value considering Glu's net cash. While specific financial projections beyond the purchase price are not detailed in this 8-K, the stated intent is to strengthen EA's mobile gaming segment and drive growth in this expanding market.

The merger is contingent upon several conditions, including approval from Glu's stockholders, expiration of waiting periods under antitrust laws (specifically Hart-Scott-Rodino and Austrian antitrust approval), accuracy of representations and warranties, compliance with covenants, absence of any prohibitive laws or orders, and no material adverse effect on Glu.

Vested stock options and restricted stock units of Glu will be converted into cash payments. Unvested options and restricted stock units will be assumed by Electronic Arts and converted into equivalent awards for EA stock, with performance-based awards adjusted to 'target' achievement and converted to time-based vesting schedules.

The Voting and Support Agreement, secured with a shareholder holding approximately 12.1% of Glu's voting power, is significant because it commits this large shareholder to vote in favor of the merger, increasing the likelihood of obtaining the necessary stockholder approval for the transaction.