PopCap’s Big Moment: Acquisition or IPO, with Pitfalls and Promise Either Way

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least your people are still in charge of pulling the levers day to day.

On the other hand, there’s an entirely new kind of pressure in having to meet Wall Street’s expectations. Roberts has talked about the perils of getting the stock market to understand the way PopCap wants to do business, virtually shuddering at the thought of being seen as a manufacturer with investors overly interested in the pipeline of new products.

In that light, maybe a buyout isn’t so bad—provided it’s structured to give your team autonomy. Such arrangements are no longer rare, Pidgeon says, pointing to the merger of game labels Activision and Blizzard, a tie-up that allowed Blizzard to maintain its independence.

“I do think that’s the new model. If you’re going to acquire, you have to make sure you’re giving the studio you’re acquiring complete creative freedom because you’re buying their legacy. You want that to continue—like Disney and Pixar. You’ve got to let them do what they do best,” Pidgeon says.

As for potential buyers, Think Equity analyst Atul Bagga wrote that EA was an unlikely candidate. EA has previously downplayed the idea of big-dollar purchases in meetings, Bagga wrote, and has even repeated that publicly: He pointed to this Bloomberg report from late last year, in which CEO John Riccitiello lamented the high prices of potential buyout targets, saying “I don’t need a billion-dollar acquisition.”

Bagga also notes that PopCap has said about half of its business is from desktop and console games. Bagga said EA would be more interested in the social, online, and mobile sides of PopCap’s portfolio, which he estimates brought in upwards of $30 million last year—not much when weighed against that rumored $1 billion price tag.

“I think potential acquirers could be Japanese companies (DeNA, Gree) that are trying to grow outside Japan and outside feature-phones; or larger media companies,” Bagga wrote.

And finally, here’s how PopCap’s Roberts addressed the possibility of a buyout instead of going public in a February Q&A with The Seattle Times’ Brier Dudley:

“Anything could happen. We’ve been talked about as an acquisition target a lot over the years. The goal is kind of the same. We’re trying to build a legacy of great enduring games. If that is better done with an IPO, we’ll do an IPO. If there’s an acquisition that makes sense for that—and the right partner was there at the right time—we might do that. But we don’t really change our business based on either one of those.”

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