Electronic Arts snaps up PopCap for $750 million in cash and stock

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Electronic Arts Inc. on Tuesday said it has agreed to purchase PopCap Games, the maker of Bejeweled, in a deal valued at as much as $1.35 billion.

The transaction calls for EA to pay $650 million in cash, plus $100 million in EA stock. In addition, EA agreed to pay out as much as $550 million in cash should PopCap meet certain financial milestones over the next three years. EA also said it would spend $50 million in stock over four years to retain PopCap’s 450 employees.

If the tally reaches $1.35 billion, PopCap would be the most EA has ever paid for an acquisition. Its purchase of BioWare in 2007 for $620 million, plus $205 million in stock, represented a larger up-front investment of more than $825 million. But that deal did not contain additional cash incentives for BioWare as PopCap’s does.

Founded in 2000, PopCap is perhaps most famous for its first breakout title, Bejeweled. The puzzle game, and its subsequent variants, have sold more than 50 million units in the past 11 years.

But the Seattle developer has been more than just a one-hit wonder, cranking out a series of highly polished titles over the years that have gained it the respect of serious as well as casual players. Its Plants vs. Zombies, for example, won the 2009 Puzzle Game of the Year award from PC Gamer. Another game, Peggle, was named one of the Top 10 Video Games of 2007 by Joystiq, a site that caters to hard core gamers.

For EA, the deal is just one in a series of strategic acquisitions designed to bolster the company’s presence in the growing market for mobile and social games.

Most recently, EA in May purchased Firemint, an Australian developer of smart phone games such as Flight Control and Real Racing. In October, it snapped up Chillingo, the publisher (though not the developer of) Angry Birds, one of the most successful games ever for Apple’s iPhones and iPads. And in November 2009, EA paid $275 million in cash for Playfish, a developer of social games on Facebook.

-- Alex Pham

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