Sega agrees £625m takeover of Angry Birds maker Rovio

The mobile game developer behind the Angry Birds media franchise has agreed to be bought by Sega Sammy Holdings for €706 million (£625 million).

Rovio Entertainment confirmed over the weekend that it was in talks about a possible acquisition by the Japanese gaming giant, known for creating the Sonic the Hedgehog video game series.

On Monday, it revealed that Sega had offered €9.25 per share and an option of €1.48 per share, representing a 19 percent premium over the stock’s closing price on Friday.

Sega said the deal would help accelerate its growth in the international gaming industry, which is expected to grow to a $263.3 billion market within the next three years, while mobile gaming will increase its share of the overall market up to 56 percent.

The company added that the combination would help create synergies between the two companies, including leveraging Rovio’s global intellectual property and mobile gaming platform Beacon.

Following the announcement, shares of Rovio rose 17.9 percent to $9.16 in mid-afternoon trading. Sega Sammy shares fell more than 4 percent during the overnight session in Asia.

Haruki Satomi, president and chief executive of Sega Sammy, commented, “I feel blessed to announce such a transaction with Rovio, a company that owns ‘Angry Birds’, which is loved all over the world.”

He added: “Historically, as represented by the ‘Sonic the Hedgehog’ series, Sega has released numerous video game titles across a variety of gaming platforms.

“I am confident that the combination of both companies’ brands, characters, fan base, as well as corporate culture and functionality will create significant synergies in the future.”

Founded two decades ago by three university students in Helsinki, Finland, Rovio faced bankruptcy when it launched Angry Birds, one of the most successful mobile games in history.

Said to be highly addictive, the game features a flock of colorful birds trying to protect their eggs from green-colored pigs and has been downloaded more than 5 billion times.

Pop star Justin Bieber, novelist Sir Salman Rushdie, Mad Men actor Jon Hamm and former British Prime Minister David Cameron have all acknowledged their love for Angry Birds.

Aside from online games, a miniature golf venue, comic strips, theme and activity parks, National Geographic books, and two Hollywood animated films based on the series have been developed.

But despite the huge success it has enjoyed with Angry Birds, Rovio has struggled at times to increase revenue and has been forced to cut jobs since it was unable to replicate that success with another popular game series.

In 2018, the company closed its London-based game studio just a year after launch following a drop in brand licensing revenues, tougher market competition and a profit warning.

The Covid-19 pandemic sparked a resurgence in the group’s fortunes as tight lockdown restrictions on in-person socializing meant people spent more time indoors, massively increasing video game purchases.

However, revenues started to level off again as Covid-related restrictions eased, while operating profits fell by almost a third between 2020 and 2022.

Before accepting a takeover bid from Sega, the company received an unsuccessful bid of €683 million from Tel Aviv-based slot game designer Playtika Holding.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said Sega is “confident that there are more eggs in Rovio that have yet to hatch.”

She added, “It’s already adept at reviving classic characters like Sonic the Hedgehog, so the Japanese company is clearly hoping the acquisition of Rovio will catapult it to new franchise success.”