Glu Mobile Inc. (NASDAQ:GLUU), a leading global developer and publisher of free-to-play games for smartphone and tablet devices, announced that Tencent Holdings Limited (Tencent, SEHK: 00700) had agreed to purchase 21 million shares of Glu’s common stock at a price of US$6.00 per share for total consideration of US$126 million.
The transaction will be completed in two tranches, with Tencent today purchasing 12.5 million shares, and committing to purchase the remaining 8.5 million shares upon the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. Subject to the foregoing, the parties expect the second tranche to be completed in Q2-2015. Tencent will own approximately 14.6% of the total shares on a fully-diluted and as converted basis immediately after completion of the investment. Glu will have a pro forma cash balance of approximately $190 million, based on Glu’s cash balance as of March 31, 2015, immediately after the completion of the transaction.
“I am proud to announce that we have entered into a strategic relationship with arguably Asia’s largest internet company and the world’s largest games company –Tencent. I consider their expertise in gaming to be unrivalled and we are excited to power ahead with the support of a fantastic partner that believes in our strategy and shares our vision,” said Niccolo de Masi, Chairman & CEO of Glu.
De Masi continued, “We are delighted to gain a new value-added Board member as part of this partnership. Steven Ma, SVP and Head of Tencent’s Interactive Entertainment Group joins our Board of Directors today. We look forward to collaborating with Tencent to bring more high quality and enjoyable gaming experience to our users.”
“Tencent was attracted to Glu due to its five-year growth track record, high-quality entrepreneurial management, and unique approach to methodically building a portfolio of success in the shooter, action-RPG, narrative-RPG, time-management, sports and racing genres,” said Steven Ma.
Mr. Ma continued, “Collaboration between our companies will enable Glu to tailor its games more powerfully by tapping Tencent’s strength in online, social and MMO capabilities. I look forward to working with Niccolo and the rest of the Glu Board to take Glu to the next level.” (Original Source)
Shares of Glu Mobile closed today at $5.41, up $0.3 or 5.87%. GLUU has a 1-year high of $7.60 and a 1-year low of $3.27. The stock’s 50-day moving average is $5.02 and its 200-day moving average is $4.36.
On the ratings front, Glu Mobile has been the subject of a number of recent research reports. In a report issued on March 5, Piper Jaffray analyst Michael Olson reiterated a Buy rating on GLUU, with a price target of $5.50, which represents a potential upside of 7.6% from where the stock is currently trading. Separately, on February 5, Northland Securities’ Darren Aftahi reiterated a Buy rating on the stock and has a price target of $7.50.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Michael Olson and Darren Aftahi have a total average return of 8.4% and -2.2% respectively. Olson has a success rate of 57.1% and is ranked #628 out of 3583 analysts, while Aftahi has a success rate of 55.1% and is ranked #3061.
In total, 5 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $5.11 which is 29.0% above where the stock opened today.
Glu Mobile Inc develops, publishes & markets games designed to appeal to users of smartphones & tablet devices. Its gaming brands include Blood & Glory, Contract Killer, Deer Hunter, Eternity Warriors, Frontline Commando, Gun Bros, & Heroes of Destiny.