Keywords Studios is eyeing a £2.2 billion takeover by Swedish private equity giant EQT
- Keywords has received an offer of £35.50 per share from private equity firm EQT
- EQT now has until June 15 at 5 p.m. to make a concrete offer or walk away
London-listed video game services company Keywords Studios has confirmed it is in discussions over a potential £2.2 billion takeover by EQT Group.
The Irish company has received an offer of £35.50 per share from EQT, after rejecting four previous proposals from the Swedish private equity firm.
The company said the latest offer, a premium of more than 70 percent to Keywords’ closing price on Friday, represents a “significant increase” over its original approach and that it “intended to recommend this” to the shareholders.
Fantasyland: Keywords Studios has worked on famous franchises including Fortnite, Assassin’s Creed, Pro Evolution Soccer and The Legend of Zelda (pictured)
Under the city’s takeover rules, EQT now has until 5 p.m. June 15 to make a concrete offer or walk away, although the deadline could be extended.
Keywords Studios shares rose 62 per cent to £23.82 by early Monday afternoon, making them the biggest gainer on the AIM All-Share Index.
However, the group’s share price more than halved in the 18 months leading up to the takeover announcement amid concerns that artificial intelligence threatens its future.
Analysts at HSBC UK said the “market response to AI fears has been harsh,” as Keywords has invested in automation and applied AI to game testing, player support and translation tools.
Keywords provides technical and creative services to most of the world’s leading video game companies, including Microsoft, Ubisoft, Electronic Arts and Activision Blizzard.
When Keywords floated on the London Stock Exchange in 2013, it had 120 employees and a market capitalization of just £50m, but this has since grown to over 13,000 and around £1.9bn respectively.
The potential takeover by EQT comes amid a renewed level of takeover activity involving London-listed companies, which are perceived to be undervalued compared to their global peers.
In January, EQT bought veterinary products maker Dechra Pharmaceuticals in a £4.5 billion leveraged buyout deal.
In the past month, cybersecurity specialist Darktrace, satellite software company IQGeo Group and music royalty investor Hipgnosis Songs Fund have all agreed to be bought by US private equity firms.
Mining giant Anglo American also received and rejected two approaches – the latter worth £34 billion – from its much larger Australian rival, BHP Group.