PopCap â??rejected $5m Microsoft buyoutâ??

PopCap once declined a $5 million acquisition offer by Xbox platform holder Microsoft, an exec at the social game studio has said.

“I don’t think a month goes by where we don’t get enquiries of investment offers in some form or another,” PopCap creative director Jason Kapalka tells Develop.

“So far nothing has worked out.”

Kapalka says the studio – famous for projects such as Plants vs Zombies and Bejeweled – receives increasingly lucrative buyout offers on a regular basis. But to begin with, he says, the bids couldn’t have been poorer.

“We had a couple of funny instances in the early years of PopCap where we were talking to Microsoft about a possible acquisition – I think it was in 2002 – and they sat us down and gave us this long speech about why our company was worth 5 million dollars, at a time when we had four million in the bank.

“We didn’t know much about stock prices and business valuations at the time, but it really didn’t sound like a very good deal even then.

PopCap, much to the surprise of analysts and industry commentators, remains an independent unit despite its attractive returns and profitability. Its valuation continues to grow, says Kapalka.

“Microsoft’s $5 million buyout offer was the first one, but that’s been rising to pretty crazy numbers. I remember having a discussion with some people back in 2004, and we were talking about a buyout worth $100 million. The biggest offer we received before then was only half of that. I think I blurted out a ‘what!?’ [But that offer] didn’t work out for other reasons, really.”

In a full and frank interview with Develop, Kapalka says PopCap isn’t compelled to sell out to another publisher – insisting that independence comes first.

“I think for us there’s no pressure to be bought out,” he says.

“We’re not a VC-funded company – we don’t have to give back money to our investors. We’re always looking at what would happen after acquisition – in truth I wouldn’t want to sign a deal where I make a lot of money but I’d end up working with people I wouldn’t be happy with for the next four years.

“That’s definitely something we talk about when in discussions with the people who want to buy us – how much of our independence can we retain. Are we still allowed to make project choices?

“I can’t say a buyout would never happen – we might find the right partner one day. We once floated the idea of going public, but again we thought against it. We’re profitable and we don’t have an urgent need to change that if we don’t want to.”