The Other Shoe Drops on Electronic Arts' Purchase of PopCap Games

| | Comments (0)
Electronic ArtsEarlier this week, Electronic Arts announced that it plans to acquire PopCap Games. To consummate that purchase, EA needs to raise $550 million in cash. EA arranged for a borrowing facility prior to announcing the purchase, but that arrangement was obviously more expensive than EA felt it should pay. Today, EA announced that it hopes to sell $550 million of Convertible Senior Notes to finance the PopCap purchase. If the placement is successful (and it will be) the notes will be due in 2016 and will be convertible into EA stock. Obviously, EA is still figuring out the price the market will bear, since the conversion rate of the notes is still to be determined, and EA is prepared to issue an additional $82.5 million of these notes if demand exceeds the initial $550 million requirement. To summarize, EA will issue a lot of convertible bonds to fund its purchase of PopCap, as long as it can do so below the cost of the backstop facility it has already arranged.


UPDATE 7/15/11: Electronic Arts has priced the offering and plans to close the transaction on July 20, 2001. The Convertible Senior Notes will pay interest semi-annually and bear an interest rate of 0.75%. The notes will be convertible at approximately $31.74 per share (subject to certain events), and unless certain events occur, will be convertible after April 15, 2016.

Leave a comment

About this Entry

This page contains a single entry by Editor published on July 14, 2011 9:41 AM.

Take-Two Interactive Maligns Strategy Gaming was the previous entry.

Nintendo 3DS Adds Netflix Streaming is the next entry.

Find recent content on the main index or look in the archives to find all content.

 

Add to Technorati Favorites