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EA to borrow $550 million for PopCap purchase

Friday, 15th July 2011 07:15 GMT By Brenna Hillier

EA has announced it will borrow $550 million in order to raise funds for its acquisition of Popcap.

According to EA’s statement, a “portion” of the funding raised will be used to complete the purchase of PopCap, for which EA has offered $650 million in cash plus $100 million in stock. If the deal falls through, it intend to use the money for “general purposes”.

EA’s decision to borrow risks share price fluctuation as nervous investors assume the worst, but its tenacious hold on its cash pool suggests it might have near-future acquisitions in mind – a pretty safe bet, given its recent habits.

EA is calling for institutional buyers to take on senior convertible notes with the company, by market close on July 20. The notes will be largely frozen until April 2016, after which they’ll be redeemable for cash payouts or shares, which are currently valued at $31.74. EA will pay 0.75 percent interest per annum on the loans. An extra $82.5 million in notes is available above EA’s target of $550 million.

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4 Comments

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  1. Patrick Garratt

    This is why I assumed it was bullshit. EA doesn’t have the money.

    #1 3 years ago
  2. Grimrita

    The beginning of the end for EA. They havent made a profit in years and keep on throwing money around. They are really banking on the success of BF3 and SWTWoW, which, I believe wont reach anywhere near the numbers they need for the titles to break even, let alone make a profit

    #2 3 years ago
  3. Lewis247

    This is a joke right!? Fuck, with that kind of borrowing isn’t it clear they don’t have enough to buy something?

    Big companies have no real sense of money anymore.. you don’t have the money.. so you can’t have it.. Oh infact fuck it, let’s just borrow half a billion dollars and get it!

    #3 3 years ago
  4. Phoenixblight

    @3

    Zynga was going to do the exact same thing since they wouldn’t have had 1 billion dollars. Hell there aren’t even worth that.

    #4 3 years ago