$1 Bn Acquisition Looms: Pop Cap Games

Posted: June 23, 2011 in Uncategorized

This is what I’ve been waiting for.

The 4th leg of the entertainment industry — gaming — is in its hot streak again with a reportedly looming acquisition of Pop Cap Games to the tune of $1 Billion. In TechCrunch insider’s report, contenders may include (but not limited to) Zynga, EA and TenCent.

My bet is Zynga.

They are poised to expand their horizons beyond Facebook. They will need other revenue engines in the next 3 years and acquiring PopCap will be a big boost in their investment portfolio and a perfect mix for their product offerings. An reported annual earnings of $100-150 million is not bad at all.

Should the winner or buyer be TenCent, then I’m afraid that those positioning themselves as the dominant  Asian player in online games will have a hard time catching up.

Interesting times indeed.

(the full article from TechCrunch is below)

PopCap Games To Be Acquired For $1 Billion+

by Jason Kincaid

Huge news in the gaming world: PopCap Games, the company behind such hits as Plants vs Zombies and Bejeweled, is in the process of being acquired — and we’re hearing from multiple sources that the price is over $1 billion.

The question now is who the buyer is. The obvious possibility is Zynga, which has made a string of game-related acquisitions over the last year. But we’re hearing they’re out. Our sources say that Zynga did indeed kick the tires hard on a potential acquisition, but it looks like the company couldn’t get comfortable with the price PopCap was asking for.

Popcap’s revenues are in the range of $100-150 million, we hear — and a price of over $1 billion would have put the deal at a possible 10x multiple, which may have been too rich for Zynga’s blood. So who else could it be?

We’ve heard that it might be videogaming powerhouse Electronic Arts, though the acquisition would be a very large one for the company (EA’s market cap is $7.49 billion). That said, it wouldn’t be EA’s first big bet on a hot gaming startup: they acquired Playfish in 2009 for up to $400 million after earnouts.

Another possibility would be a company in Asia that’s looking to break into the stateside gaming market, similar to the idea behind DeNA’s $300 million+ acquisition of ngmoco last October. One candidate is massive Chinese company Tencent, which has a massive market cap (and some games of their own). But there are other possibilities that would fit that profile as well — we’ll keep digging.

PopCap was previously rumored to be exploring a possible IPO later this year. The company raised $22.5 million in October 2009.

Source: TechCrunch


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s