? Acquisition
Stockholm-based mobile-focused games developer and publisher Stillfront Group (OM:SF) has entered into an agreement to acquire 100% of shares in Croatia-based mobile narrative & lifestyle games developer Nanobit for up to $148m on a cash and debt free basis
The total purchase price consists of two tranches, both of which are paid 70% in cash and 30% in newly issued Stillfront shares:
1st tranche of $100m — Stillfront will acquire 78% shares of Nanobit. The expected closing date is September 30, 2020
2nd tranche of up to $48m —Stillfront will acquire the remaining 22% shares of Nanobit. The amount of the second trance consideration depends on the Nanobit’s EBITDA level for the FY2021-2022 with a maximum total earn-out consideration of $48m to be paid in 2023
Stillfront and Nanobit will enter into the Shareholders’ agreement to regulate the business relationship between founders and Stillfront until the payment of the 2nd tranche consideration
The founders and key personnel will remain part of the Nanobit’s management team
The implied valuation multiples based on the 1st tranche consideration
EV/Adj. EBITDA multiple is 6.4x
EV/Adj. EBIT multiple is 7.2x
Multiples | 1st tranche | Total price |
EV/Rev’20E | 1.7x – 1.9x | 2.0x – 2.1x |
EV/EBIT’20E | 5.6x – 7.6x | 9.2x – 12.6x |
Based on the Nanobit’s forecast for FY2020
? Strategic Rationale
The acquisition can be considered as a great “add-on“ to the existing powerhouse platform of Stillfront for multiple reasons:
broadening the addressable market with female-focused mobile games
entering new genres of casual mobile games — interactive stories and lifestyle simulators
cross-selling opportunities with the existing mobile casual audience (Storm8, Candywriter)
? Stillfront’s Latest Acquisitions
In April 2020, Stillfront acquired a US-based mobile games developer Candywriter, focusing on casual and mash-up (life simulation) games, for a total consideration of $195m
In January 2020, Stillfront acquired mobile game publisher Storm8, focusing on match-3 games, for $400m
In 2018-2019, Stillfront was also a very active acquirer. The company announced multiple M&As — KIXEYE, Playa Games, and Imperia Online
? Financial Performance Of Nanobit
In a period of January — June 2020, Nanobit has a preliminary preliminary unaudited IFRS net revenue of roughly $37m and adjusted EBIT of about $7m
In $m | Min | Max |
Net Revenue’20E | 68.9 | 73.5 |
EBIT margin’20E | 17.0% | 22.0% |
Based on the USD/SEK exchange of 8.71 (average August 2020)
? Products
Nanobit is a mobile game developer and publisher with the focus on narrative lifestyle RPG for female audience
Up to date, the studio has released 19 games and 10 applications with 145 million lifetime downloads
Most of the downloads were generated by three flagship games: Tabou Stories, My Story, and Hollywood Story
Nanobit saw a rapid increase in downloads during the lockdown period, with a peak of more than 6 million downloads in April 2020. In June-July 2020, the number of downloads decreased reaching ~3 million downloads
SOURCES: STILLFRONT, NEWS.CISION

