Stillfront Group Acquires Nanobit For Up To $148m

? 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

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

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