As acquisitions in the mobile gaming space heat up, one of the bigger players using the freemium model, Glu Mobile, moved up the vesting schedule for its two top executives if they have to step down following a change in control, according to a filing with the Securities and Exchange Commission.
Both the company’s chief executive officer Niccolo de Masi and chief financial officer Eric Ludwig will get full acceleration of all of their outstanding equity awards if they have to step down within twelve months of a change in control (which would likely mean another company acquiring Glu in this case). That’s up from getting 50 percent of their outstanding, unvested equity awards in the old contracts. The company didn’t immediately respond to inquiries.
The filing said the changes were part of “regular executive compensation review,” but this could also raise speculation that the company may be open to the idea of an acquisition. Glu’s shares have benefited from not only from quarter-over-quarter growth in smartphone revenue, but also a rising tide effect with Zynga’s upcoming initial public offering and EA’s $1.3 billion agreement to buy casual gaming rival PopCap Games.
Glu’s share price has more than quadrupled to $5.79 today from $1.29 a year ago, raising its market capitalization to $309.2 million. Shares reached a four-year high on Friday at $6.10. The company said smartphone revenue will come in at between $8.25 and $8.75 million in the second quarter; it made $9.87 million in smartphone revenue in all of 2010.
The company is still producing quarterly net losses though as it winds down its feature phone business; it lost $3.2 million in the first quarter. Glu was also one of the free-to-play mobile gaming businesses that was more heavily dependent on offer revenue, which Apple clamped down on in April. In May, the company said it expected it could replace 50 to 75 percent of the forgone revenue from offers with other kinds of incentivized ads.
The filing comes at a time when the pace of acquisitions in mobile gaming have picked up over the past year. Electronic Arts most recently agreed to buy PopCap for $750 million in cash and stock, plus $550 million in earnouts if the company hits certain targets by 2013. It has also bought smaller mobile gaming-related companies like publisher Chillingo and Australian developer Firemint. Zynga has also picked up mobile gaming companies along the way, with its most expensive purchase being the $53.3 million deal to buy Words With Friends-maker Newtoy. While Zynga hasn’t historically made large-scale acquisitions, we’ve been told that Zynga’s forthcoming IPO should be no impediment to a good deal if the company wants it. The company would just file an amendment to its S-1 if need be. (Update: Speak of the devil, Zynga did file an amendment to their S-1 yesterday featuring their agreement with Facebook.)
Other rivals with similar revenue models for their smartphone games including Storm8, the bootstrapped company behind RPGs like World War and casual games like Bakery Story, have also expressed interest in finding partners like investors or acquirers.