Game publisher Glu Mobile Inc. will acquire Beijing Zhangzhong MIG Information Technology Co. Ltd., a developer and publisher of mobile games for China, for $39.7 million in cash and stock.

Glu claims it is the first U.S. publisher to acquire a developer and publisher of mobile games in China.

"In China, like many regions, it is difficult to succeed as a non-Chinese company entering the market," said Greg Ballard, CEO of Glu, San Mateo, CA.

"The acquisition of MIG gives us the ability to not only enter that market, but gives us the leadership position including successful titles, a deep relationship with China Mobile, the region's largest operator, and a strong team of management and employees to continue to penetrate the market," he said.

Under the terms of the transaction, which is expected to close in approximately three weeks, MIG's shareholders will receive approximately $14.7 million in cash.

Additional payments of up to $25 million in cash and stock are contingent upon the achievement by MIG of certain financial milestones during 2008, with a portion of the additional payments subject to continued employment of the principal officers of MIG.

The acquisition remains subject to customary closing conditions.

"It's our goal to be the leading mobile publisher in the world, and the acquisition of MIG gives us a combination of a strong portfolio of titles that are successful in China, exceptional management team and demonstrated market leadership in the region," Mr. Ballard said.

Super Glu
As part of the acquisition, Wang Bin, CEO of MIG, will join Glu as general manager and will focus exclusively on China.

In addition, Glu will add MIG's 80 employees to its worldwide team. These employees, based in MIG's Beijing and Hefei offices, will continue to develop and publish mobile games as well as work in conjunction with Glu's existing Beijing office.

Glu Mobile is the creator of games such as Super K.O. Boxing, Stranded and Brain Genius. It also produces titles based on major brands from partners including Atari, Activision, Konami, Harrah's, Hasbro, Warner Bros., Microsoft, PlayFirst, PopCap Games, SEGA and Sony.

MIG is a leading developer and publisher of mobile games for China. Founded in 2002, MIG is based in Beijing, with a development studio in Hefei.

The Chinese mobile market has more than 500 million mobile subscriptions, according to China's Ministry of Information Industry.

With the acquisition of MIG, Glu will be better positioned to publish its existing titles in China and to continue to issue MIG's games.

"This complements our existing operation in the region and makes us the only top-tier global publisher to have a strong presence in China, which we deem to be a very important emerging market," Mr. Ballard said.