What happened
Shares of Glu Mobile (GLUU +0.00%) roared out of the gate Tuesday, rising 33.7% as of 10:25 a.m. EST after the maker of mobile games announced its fourth-quarter 2020 earnings results last night.
Glu grew its quarterly revenue 25% year over year and its full-year sales 31%. Earnings were $0.13 for the quarter, erasing losses earlier in the year to close out 2020 with a $0.12 profit -- all of which was great news, but probably not the real reason Glu stock is soaring today.
Instead, investors are excited because Glu Mobile is getting bought out.
Image source: Getty Images.
So what
Oh, yes, did I forget to mention that? Yesterday after close of trading, gaming giant Electronic Arts (EA +0.09%) announced that it will purchase Glu Mobile in a deal valued at about $2.1 billion, net of Glu's cash and debt.
In exchange for Glu and its stable of game brands including Kim Kardashian: Hollywood, Disney Sorcerer's Arena, and MLB Tap Sports Baseball, EA will ante up $12.50 per share in cash, a 36% premium to Glu's closing share price on Feb. 5.
Now what
For EA's part (shares of which are up 2.7%, by the way), the company says that Glu's $1.3 billion in annual bookings (i.e. revenue from gamers) "will be immediately accretive to Electronic Arts' total net bookings, and is expected to grow underlying profitability beginning in its first year," even as it adds "significant scale to Electronic Arts' mobile games business."
EA expects the deal to close sometime in the second quarter of 2021, shareholders approving and regulators permitting.
