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Playtika Acquires Reworks for up to $600m

M&A | ANNOUNCEMENT DATE: 31 AUG 2021
WRITTEN BY | 05 Sep 2021
Playtika Acquires Reworks for up to $600m
M&A

💵 Acquisition

  • Israel-based mobile social games developer and publisher Playtika (NASDAQ: PLTK) has entered into an agreement to acquire Finland-based game developer Reworks for up to $600m:
    • Playtika has bought 80% of Reworks for $400m in cash
    • Reworks may also receive earn-out consideration in the amount of 6x EBITDA (but not exceeding $200m) if the company reaches the $10.3m EBITDA benchmark in 2022. Thus, the earn-out may range from $61.8m to $200m. If the targets are not met, Playtika will buy the remaining 20% for $1
  • The deal structure is rather complicated, and the deal multiples may differ greatly, based on Reworks’ potential financial performance:

Reworks Multiples

  • So far, this is the largest acquisition of Playtika. The deal is expected to contribute ~$30m to the company’s sales this year
  • In Jan’21, Playtika raised $1.88B through the IPO on NASDAQ at a price of $27 per share, exceeding its target range of $22-24
  • According to the Q2’21 earnings release, the company has around $1.4B available liquidity for further M&A initiatives, so we have all the reasons to wait for more acquisitions.

🎲  Product

  • Redecor is a popular design game that lets players decorate homes. The platform of the game has a potential to be used for fashion, auto, and restaurant-related titles
  • The app has been downloaded more than 24 million times since its launch in Apr’20. The downloads peaked in Jan’21 at over 3 million. In Aug’21 Redecor was downloaded about 1.05 million times

Reworks downloads

💸 Previous Acquisitions

  • Playtika has a strong inorganic growth strategy, primarily expanding its game portfolio through acquisitions, which has been the key driver of revenue ($1.4B out of $2.3B in 2020) and profitability. So far, Playtika has acquired 8 game studios, including Reworks
  • In Aug’19, Playtika acquired Finland-based mobile game developer Seriously, the studio behind the puzzle game Best Fiends, for $351.2m
  • In Jan’19, the company acquired Austria-based mobile solitaire games developer Supertreat, for $200m
  • In Nov’18, Playtika acquired Germany-based mobile puzzle games developer Wooga, for $204.1m
  • In Oct’17, the company acquired Israel-based social games developer Jelly Button, for an undisclosed sum
  • The company has also expanded its game portfolio by acquiring games, such as House of Fun (2014), World Series of Poker (2013), and Bingo Blitz (2012)

📈 Playtika’s Q2’21 results

  • For Q2’21, Playtika reported Revenue of $659.2m (vs. $650.5m in Q2’20) and EBITDA of $198.7m (vs. -$42.5m inQ2’20)
  • Total cost and expenses in Q2’21 amounted to $493.8m compared to $722.5m in Q2’20
  • The company reported a net income of $90m in Q2’21, compared to a net loss of $139.6m in Q2’20;
  • DAU count for Q2’21 dropped by 12% to 10.4 million from 11.8 million in Q2’20, with DPU count dropping from 315k in Q2’20 to 300k in Q2’21;
  • ARPDAU increased to $0.70 in Q2’21 vs. $0.61 in Q2’20, while Average MAU stayed on the same 36.1m users as a year before.

Sources: PLAYTIKA, BLOOMBERG

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Reworks
  • Founded in 2018
  • Headquarters – Helsinki, Finland
  • Founded by Jarno Fabritius
  • Team of ~35 employees
  • Mobile design app developer and publisher
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