Are you a sucker for Bejelewled? Or maybe you prefer having your plants beat up some zombies? Do you enjoy tending to your farm on Facebook? Or would you rather put your vocabulary to the test in Words With Friends? It’s probably safe to say that in some shape or form you or your friends know of at least one game created by developers PopCap and Zynga.
So what’s the big fuss?
According to TechCrunch.com (as well as many other notable sources) Electronic Arts has offered to buy Popcap for a mere… $1 billion. That’s right, the company behind hits like Bejeweled, Peggle, Plants vs. Zombies, and Bookworm (to name a few) is in the midst of the biggest decision their company has ever had to make. Xconomy.com states that Popcap has only recently reached $100 million in sales – a tenth of what EA is offering them. Additionally, Zynga has also come to a fork in the road as they are supposedly thinking of filing for an IPO. Investors.com states that, “Zynga is expected to raise up to $2 billion in an IPO that could value the company at $20 billion…”
So which company has the better deal? That’s tough to say. Acquisitions and IPOs are very different situations. Acquisitions create security for smaller companies, allowing for growth and expansion with an alleviated worry of financial risk, and usually come with benefits from the parent company. IPOs, on the other hand, offer stability in the stock market, easier future financing, and an enhanced image of the company for customers and vendors.
While our data shows no noticeable spikes between the two companies’ traffic from the news of the offers, I find it interesting that two companies, who are in the same industry, are looking at two very different futures. Granted, I’m sure there are many variables that comprised the offers for both companies. Will PopCap live up to its $1 billion price tag? Will Zynga succeed in the cruelty of the stock market? We’ll just have to wait and see if the deals go through and if they are worth it down the line.
Matt Wilson is the UI/Graphic Designer at Compete.com. Matt is responsible for managing the visual design for the company, working with both the product and marketing teams. Before Matt joined the Compete Team he and his friends founded their own company, Parallel LLC, which worked primarily (but not solely) with the major record labels. Matt hopes to one day become a creative director and/or a skydiving instructor. Connect with Matt on LinkedIn at email@example.com.