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EA to Acquire PopCap Games for $650mil

EA posts steep price for top casual game developer

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Electronic Arts has announced an agreement to acquire PopCap Games, a leading provider of games for mobile phones, tablets, PCs and social network sites.

“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.”

“We picked EA because they have recast their culture around making great digital games,” said David Roberts, CEO of PopCap. “By working with EA, we'll scale our games and services to deliver more social, mobile, casual fun to an even bigger, global audience.”

PopCap is one of the largest digital and social gaming companies with more than 150 million games installed and played worldwide on platforms such as Facebook, RenRen, Google, iPhone, iPad and Android. In calendar year 2010, approximately 80% of PopCap’s revenue was on high growth digital platforms. The company's blockbuster titles include Plants vs. Zombies, Bejeweled, and Zuma.

EA will pay approximately $650 million in cash and $100 million in shares of EA common stock to be issued to certain stockholders of PopCap. In addition, the PopCap sellers are entitled to additional variable cash consideration, contingent upon the achievement of certain earnings before interest and tax performance milestones through December 2013, EA’s third fiscal quarter end.

The exact earn-out calculation is subject to adjustments. EA will also provide up to $50 million in long-term equity retention awards to PopCap employees to be granted over the next four years.

This is by far EA's biggest splash in the casual game market, that will more than likely pay off in the long run.
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