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MTG Acquires Ninja Kiwi And Completes A Direct Share Issue

M&A | ANNOUNCEMENT DATE: 24 MAR 2021
WRITTEN BY | 28 Mar 2021
MTG Acquires Ninja Kiwi And Completes A Direct Share Issue
M&A
12 DEC 2020
MTG Acquires Hutch for up to $375m
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💵 Acquisition

  • Stockholm-based investment holding company with assets in esports and gaming Modern Times Group (ST: MTGA) has entered into an agreement to acquire New Zealand-based mobile tower defense games developer Ninja Kiwi, for a total consideration of $189m, including:

    • $141.4m upfront, paid 56% in cash and 44% in newly-issued Class B shares;

    • several earnout considerations for a total of $47.2m depending on the target’s profitability within 3 next years, paid 73% in cash and 27% in class B shares subject to a 12 months lock-up period

  • Based on Ninja Kiwi performance in 2020 ($39.2m Revenue and $19.2m adj. EBITDA) the transaction multiples are 3.6x EV/Revenue and 7.2x EV/adj. EBITDA w/o earnouts and 4.8x EV/Revenue and 9.7x EV/adj. EBITDA including earn-out payments. The deal is expected to close in Q2’21

  • This is the fourth time MTG acquires a gaming company and the first acquisition outside Europe. Previously, MTG added mobile/PC game developers Kongregate, InnoGames, and mobile racing expertise of Hutch

  • With this acquisition, MTG gets an established portfolio of mobile tower defense games. According to the company’s press release, the deal also helps to drive MTG’s overall growth, utilizing the target’s expertise

🧩 Direct Share Issue

  • Modern Times Group has closed a direct issue of ~9.7m Class B shares at ~$13 per share, raising approximately $127m (SEK 1.1B)

  • The proceeds will be used to finance the Ninja Kiwi acquisition and enhance the company’s financial flexibility. Moreover, around 4.8m of the shares will be allocated to US-based investment company Atairos, thus making it a significant MTG shareholder

🎲 Product

  • Founded in 2006, Ninja Kiwi is best known for its Bloons Tower Defence franchise and currently employs over 70 people with HQ in New Zealand and an office in Scotland

  • Since the release of its first game in 2007, the company has been regularly publishing sequels characterized by hybrid monetization (combination of paid and in-app purchases) and strong organic traffic

  • Overall, Ninja Kiwi games have been downloaded 140m times, with an average of about 1m users per day and 6.2m active users per month

  • Bloons is available on all major mobile platforms, on Steam, and MTG’s own gaming app

💵 Previous Acquisitions

  • In December 2020, an England-based mobile racing games developer Hutch was acquired for $275m

  • In July 2017, a US-based web gaming portal Kongregate was bought for $55m

  • In May 2017, Germany-based browser and mobile games developer InnoGames was purchased for $90m

📈 Modern Times Group Financial Performance

  • Net sales over 2020 FY amount to $462m (compared to $490m in 2019). The suggested reasoning for the decline is the negative impact of foreign exchange rates in 2020 Q4 and 2020’s overall sales decline due to the pandemic

  • The company’s net sales are divided into two categories:

    • esports, bringing $152m ($198m in 2019)

    • gaming — $310m ($292m in 2019). MTG’s gaming segment net sales have marked their all-time high during 2020

  • Adjusted EBITDA over 2020 equals $61m ($33m in 2019), which corresponds to adjusted EBITDA margin growth to 13% from 6% in 2019

  • Considering that 2020 is the company’s record year in terms of EBITDA KPIs, positive performance is driven by high user engagement as a result of successful in-games campaigns for the InnoGames portfolio

  • Company’s total net loss over 2020 has shortened to -$11m from -$53m in the previous year

Sources: MTG ACQUISITION PRESS RELEASE, SHARE ISSUE PRESS RELEASE, FINANCIAL REPORT

Modern Times Group
  • Established in 1987

  • Headquarters – Stockholm, Sweden

  • Team of ~1000 employees

  • Founded by David Chance (Chairman) Maria Redin (President and CEO) Lars Torstensson (CFO)

  • Worldwide gaming cooperative with PC, console, and mobile expertise

Ninja Kiwi
  • Established in 2006

  • Headquarters – Auckland, New Zealand, with an office in  Dundee, Scotland

  • Team of 70 employees

  • Founded by Chris Harris and Stephen Harris

  • Mobile games developer