EA confirmed today that it bought casual games developer PopCap Games for $750 million, plus an earnout that could bring it up to $1.3 billion.
The deal will increase the company’s earnings in the first quarter of fiscal year 2012 to a range of $500 million to $525 million versus the original range of $460 million to $500 million revenue (according to non-generally accepted accounting practices), according to the company’s statement. For the full fiscal year year, EA says it will earn $3.8 billion to $4.025 billion in non-GAAP revenue, including PopCap’s contributions. The deal is scheduled to close in August.
During a press conference call on the matter, EA CEO John Riccitiello and CFO Eric Brown joined PopCap CEO David Roberts in laying out the strategy behind the deal and what we can expect from it.
On the money side, the bottom line is that PopCap — while expensive — is worth the money. It relieves EA of the burden of creating new intellectual property for casual games, it strengthens EA’s content offerings on its new gaming network Origin and its casual arm Pogo, and it cements EA’s position on Facebook as the number two developer behind Zynga. EA expects PopCap to be accretive 10 cents in earnings per share or greater in fiscal year 2013. The brunt of the costs for the acquisition will show up in the second quarter of next year, when EA was already planning on taking a hit in marketing costs for big-ticket game releases in the third quarter.