Keywords Studios accepts £2.1bn takeover bid from EQT

Keywords Studios has agreed a £2.1 billion acquisition by Swedish private equity giant EQT.

The video game company has accepted a £24.50 per share offer from the Stockholm-based investment group, which bought Dechra Pharmaceuticals in January.

This represents a two-thirds premium to Keywords’ share price on 17 May, the last trading day before the company confirmed talks with EQT were underway. However, it is £1 lower than the initial approach of £25.50 in May.

The company is headquartered in Dublin and provides technical and creative services to many major video game makers, including Microsoft, Ubisoft, Electronic Arts, Tencent and Activision Blizzard.

This includes producing trailers, voice-overs, mixing sound, visual effects and translating in-game text into dozens of languages.

The pandemic has improved things immensely, as people spent more time indoors due to strict lockdown measures.

Since its listing on the AIM market in 2013, Keywords has grown significantly through acquisitions and organic growth, with revenues increasing from €16.4 million at the time to €780.4 million last year.

However, the group said on Wednesday that the “long-term potential” is not being reflected in its share prices, which have fallen in value over the past year on concerns that artificial intelligence poses a threat to the sector.

EQT is confident that with the right additional investments it can accelerate the ‘growth rate of (Keywords)’ and thus become one of the world’s leading gaming services companies.

The company aims to expand Keywords’ reach into “adjacent media and entertainment end markets and high-growth technologies.”

Jean Salata, Chairman of EQT Asia, commented: ‘As a privately held company under EQT’s ownership, Keywords Studios is well positioned to make the long-term investments required for the transition to next-gen video games and for global expansion.

“We plan to leverage our experience in the services and technology sectors to support management and further invest in innovation, talent and M&A to accelerate Keywords Studios’ current strategy.”

Keywords was originally founded in 1998 by Giorgio Guastalla and his wife, Teresa Luppino, as a provider of translation services for enterprise software developers.

Eventually, the company grew into a video game services company, working on well-known franchises such as Fortnite, Assassin’s Creed, Pro Evolution Soccer and The Legend of Zelda.

The proposed takeover is the latest blow to the London market, which has suffered an exodus of valuable companies in recent years.

Private security company G4S, Hotel Chocolat, supermarket chain Morrisons and fashion brand Ted Baker are just some of the names that have fallen into foreign hands.

And in recent months, cybersecurity specialist Darktrace, Songs Fund, financial data group Preqin and International Distribution Services, owner of Royal Mail, have all closed takeover deals worth billions of pounds.

Keywords Studios shares rose 2.85 percent to £23.84 on Wednesday morning.