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EG7 Acquires Piranha Games For Up To $73m

M&A | ANNOUNCEMENT DATE: 25 NOV 2020
WRITTEN BY | 26 Nov 2020
EG7 Acquires Piranha Games For Up To $73m
M&A

💵 Acquisition

  • Stockholm-based multiplatform games developer and publisher Enad Global 7 AB (ST: EG7) has entered into an agreement to acquire 100% of Vancouver-based game developer Piranha Games for up to $73m of cash and newly issued EG7 shares, including:

    • $24.2m of an up-front consideration, of which $8.1m paid in shares, and $16.1m paid in cash. 50% of shares will be held back and will be paid over a period of twelve months, subject to achieving specific conditions.

    • up to $48.8m of an earn-out during the period of 2021—2025, with 50% paid in cash in EG7 shares

  • All 65 Piranha Games team members will be employed by EG7, but the studio will operate independently

  • For the 12-month period ending on 30 September 2020, Piranha Games’ net sales were $17.5m, while its EBITDA was $6.6m

Multiplies With earn-out Without earn-our”
EV / Net Sales’20 4.17x 1.38x
EV / EBITDA’20 11x 3.66x

*EV — Enterprise value on a cash and debt free basis
**Based on 12-month period ending on 30 September, 2020
1:0.77 CAD to USD ratio was used

💠 Strategic Rationale

  • EG7 sticks to its strategy of complementary acquisitions to strengthen its industry position and business model, which entails more revenue and profit

  • Also, Piranha Games has a vast background of experience in creating PC/console titles, such as MechWarrior; Medal of Honor, Need for Speed: Undercover, and Transformers. The newly acquired studio will strengthen EG7 development capacities, while Piranha Games will get access to EG7 publishing and marketing assets

🎲 Products

  • Piranha Games is a PC/console game developer that is now focused on two main games from its MechWarrior franchise — MechWarrior Online and MechWarrior 5: Mercenaries. Both games are available only on PC

    • MechWarrior Online is a free-to-play online mecha MMO-action shooter, published by Canada-based publisher Infinite Games Publishing. The game was released in 2013 and generated over $57.6m in revenue with tens of thousands of daily active players

    • MechWarrior 5: Mercenaries is a single-player mecha shooter that is available on Epic Games Store and Xbox Game Pass, though it was announced that the game will also appear on Steam and GOG on December 10, 2020, simultaneously with the release of it’s DLC. Hundreds of thousands of copies of the game have been sold since its launch on December 10, 2019

  • The studio has also participated in the development of such titles, as Duke Nukem Forever, Transformers: Revenge of the Fallen, Die Hard: Nakatomi Plaza, Need For Speed: Undercover, and Bass Pro Shops: The Hunt

💸 EG7’S Latest Acquisitions

  • In August 2020, Enad Global 7 entered into agreement to acquire Canadian mobile game developer Big Blue Bubble for a total purchase price of up to $58m. The acquisition was completed on November 25,2020

  • In December 2019, EG7 acquired Sold Out Sales & Marketing Limited, a London-based video game publisher and distributor of PC/console games, for a total consideration of $26.9m

  • In June 2019, EG7 acquired 100% of shares in British game development FPS-focused studio Antimatter Games for around $170k with $400k cash balance

  • In June 2019, EG7 acquired 100% of US-based creative marketing agency Petrol Advertising for up to $23m

  • In June 2018, EG7 acquired Norwegian game development studio ARTPLANT AS for up to $120k upfront, with an earn-out consideration of ~465k shares

🧩EG7 Financial Performance

  • According to Enad Global Interim Report, in the third quarter of 2020, the company generated about $14.2m of the total revenue ($17m if BigBlueBubble is included) and approximately $2.7m of EBITDA ($3.8m if BigBlueBubble is included)

  • During the 12-month period ending on September 30, 2020, EG7 generated $79.7m of the total revenue and $11.3m of EBITDA (both indexes include BigBlueBubble)

EG7 stock.jpg
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Piranha Games
  • Established in 2000

  • Headquarters – Vancouver, United Kingdom

  • Team of 65 employees

  • Founded by — Russ Bullock and Bryan Ekman

  • PC and console game developer

Enad Global 7 (Formerly Toadman Interactive)