Keywords Studios Acquires G-Net Media For Up To $32m

? Acquisition

• Dublin-based technical & creative gaming services provider Keywords Studios (LON: KWS) has entered into an agreement to acquire Los Angeles-based games and entertainment marketing agency g-Net Media for up to $32m, including:

  • an up-front consideration of $18m, of which $14.4m paid in cash and $3.6m paid in ordinary shares upon expiration of twelve months from the date of the acquisition, which will also be subject to market provisions for a further year

  • up to $14m of an earn-out consideration paid in cash and shares, based on g-Net performance for the first and second year of the acquisition

• g-Net is the fourth acquisition announced by Keywords since its last public offering of $120m+ in May 2020. So far the company has used ~$53m with a strong focus on acquiring marketing and game development expertise. Keywords has great financial flexibility to continue to execute its buy-and-build strategy — 48 value-creating M&As since its IPO in 2013.

• During the 12-month period ending on May 31, 2020, g-Net Media reported $16.3m of unaudited revenue and $2.2m adj. EBITDA. Thus, the valuation multiples are:

*EV — Enterprise value on a cash and debt-free basis
**Based on the financial year ended on 31 May, 2020

? Products

• g-Net Media is a creative marketing agency, specializing in advertising and promotion of brands and products in entertainment, video game, and technology industries. The company creates and engages dedicated and passionate fan communities for such clients, like Activision, Microsoft, Bethesda Softworks, Ubisoft, Blizzard Entertainment, Netflix, and others

• For instance, while working with Activision, g-Net Media created a reveal trailer for Call of Duty: Black Ops Cold War, that generated over 10m views for 3 months. g-Net Media’s main goal was to capture the gameplay of the game and to develop a creative strategy for promoting the title

? Keywords Studios’ Latest Acquisitions

• In September 2020, Keywords acquired US-based developer Heavy Iron Studios for about $13.3m

• In August 2020, Keywords Studios acquired London-based creative gaming marketing agency Maverick Media Limited for a purchase price of up to $4.76m, including:

  • an upfront payment of $3.17m in cash and $0.4m in new shares

  • an earn-out consideration of $1.19m payable in a mix of cash and shares

• In June 2020, the company acquired a UK-based provider of specialized game development services provider Coconut Lizards for $2.5m

• In 2019, Keywords Studios made 9 acquisitions (Sunny Side Up, AppSecTest, GetSocial, Wizcorp, Descriptive Video Works, TV+SYNCHRON, Ichi, Syllabes, Kantan) for a total amount of $25.8m

?Keywords Studios’ Financial Performance

• Keywords Studios’ revenue during the first half of 2020 was $207.6m, which is 13% higher, compared to the same period of 2019, while adjusted EBITDA was $36.8m — +19% compared with the same period of 2019

SOURCES: G-NETMEDIA, KEYWORDSSTUDIOS, GAMESINDUSTRY