Keywords Studios set for £2bn takeover by private equity firm EQT
- Keywords revealed that EQT had received a new offer of £24.50 per share
- EQT now has until 5:00 PM on July 3 to come up with a concrete proposal
Keywords Studios’ board is to ask investors to back a new $2.5 billion (£1.96 billion) private equity acquisition strategy.
The video game services company announced it has received a new offer of £24.50 per share from Swedish private equity giant EQT, up 20 pence from an earlier proposal made on Wednesday.
After consulting with financial advisers, the Dublin-based group said it would “recommend” the deal to shareholders if EQT signals its intention to make a formal offer.
Offer: Video game services company Keywords Studios has received a new offer of £24.50 per share from Swedish private equity giant EQT
Under the city’s takeover rules, EQT now has until 5 p.m. on July 3 to submit a concrete proposal or walk away.
Keywords first announced in May that it was in takeover talks with EQT and had rejected four unsolicited offers from the owner of Dechra Pharmaceuticals.
The AIM-listed company provides technical and creative services to many of the world’s largest video game manufacturers, including Microsoft, Ubisoft, Electronic Arts and Activision Blizzard.
This includes producing trailers, voice-overs, artwork, social media posts, composing music and translating in-game text into dozens of languages.
The Covid-19 pandemic has given a huge boost to this, as strict lockdown measures around the world caused people to spend more time indoors.
The group has further expanded through a series of acquisitions, including Heavy Iron Studios, Smoking Gun Interactive and Forgotten Empires.
However, Keywords Studios shares have fallen significantly from their peak of over £33 in September 2021, amid concerns that artificial intelligence is a threat to the video game industry.
They were up 5.7 per cent, or 124p, at £23.02 on Friday morning.
Keywords further announced on Friday that full-year results would be weighted to the second half of this year due to “slower trends in content creation currently depressing industry spend.”
For the last six months of 2024, the company expects organic growth of approximately 10 percent, supported by strong spending from major clients and increasing content production across Hollywood.
The possible acquisition takes place at a time when many acquisition activities are taking place at companies listed in London. These companies are considered undervalued compared to their international competitors.
Royal Mail’s parent company, International Distributions Services, has agreed to a £3.6 billion bid from Daniel Kretinsky, a Czech billionaire with significant stakes in Sainsbury’s, Foot Locker and West Ham United.
Packaging company DS Smith, cybersecurity specialist Darktrace and telecom testing group Spirent Communications have also accepted takeover bids in recent months.