Shares of Glu Mobile (GLUU) gained 41.7% in February, according to data from S&P Global Market Intelligence. The big gains rested on one simple event: Video games veteran Electronic Arts (EA 3.30%) decided to buy the company behind mobile hit games like Kim Kardashian: Hollywood, Disney Sorcerer's Arena, and Covet Fashion.
Glu shares soared 35% higher on Feb. 9, the day after EA announced the all-cash buyout deal at an implied enterprise value of $2.1 billion. EA expects Glu to pull its weight by generating significant sales and positive operating profits right away. The acquisition should close in the second calendar quarter of 2021, after going through the usual gauntlet of regulatory reviews and shareholder votes.
"As part of Electronic Arts, we will continue capitalizing on the opportunities ahead in the expanding mobile gaming industry," Glu CEO Nick Earl said in the press release.
Glu is going out on a high note, joining EA in exchange for a generous buyout premium. If you'd invested $10,000 in Glu Mobile three years ago, it would be worth $32,700 at today's prices. The deal is unlikely to run into significant challenges before closing, growing EA's mobile gaming business roughly 70% larger in one fell swoop.
This is the end of the road for Glu's investors. Share prices are glued to the proposed price tag of $12.50 per share, leaving no room for arbitrage investments. If you already own Glu shares, you might as well just bite the bullet and cash in your stubs so you can reinvest your winnings in stocks that can continue to grow over time. Time is money, after all.