Stillfront Group Acquires Super Free Games & Sandbox Interactive For ~$310m Upfront Price

? Acquisitions

• Stockholm-based mobile game developer and publisher Stillfront Group (OM:SF) has entered into an agreement to acquire 100% of San Francisco-based mobile game developer Super Free Games and 100% of Berlin-based PC & mobile MMORPG developer Sandbox Interactive

• The total consideration for Sandbox Interactive includes ~$159m upfront purchase price and earn-out payments of 1x EBIT for each year during the next four years 2021-2024
  > The total consideration will be paid ~77% in cash and ~23% in shares
  > Sandbox generated ~$11.6m of net revenue and ~$6.4m of adj. EBITDA during Jan-Sep’2020
  > Based on the annualized financials, the upfront multiples account for 10.3x Net Revenue and 18.8x adj. EBITDA

• The total consideration for Super Free Games includes $150m upfront purchase price and earn-out payments of 0-2x EBITDA for each year during the next three years 2021-2023
  > The total consideration will be paid 47.5% in cash and 52.5% in shares
  > Super Free generated $57.6m of net revenue and ~$8.7m of adj. EBITDA during Jan-Sep’2020
  > Based on the annualized financials, the upfront multiples account for 2.0x Net Revenue and 12.9x adj. EBITDA

• Overall, the valuation multiples based on the annualized estimated 2020 financials account for:

  • around 25x EBIT’20 for Sandbox Interactive (21x EBIT’20 upfront + at least 4x EBIT’20 earn-out)

  • around 20x EBIT’20 for Super Free Games (15x EBIT’20 upfront + around 5x EBIT’20 earn-out)

• Nevertheless, such multiples should be seen in the context of high growth expected in 2021. In fact, Stillfront expects to double total EBITDA of both studios in 2021: from estimated $20.1m adj. EBITDA in 2020 to $47.2m mid range adj. EBITDA 2021.

  • Considering mid-range EBITDA’21 forecast of both studios, the total upfront EV/adj. EBITDA’21 multiple accounts for 6.5x (vs. 15.4x EBITDA’20)

Sandbox Interactive [$159m upfront]

? Strategic Rationale

• Through the acquisition of Sandbox Interactive, Stillfront increases its PC RPG portfolio, and enters MMORPG genre. The mobile version of Albion Online is scheduled to be launched in H1 2021, so the company can leverage its mobile expertise to launch a new mobile title

• Through the acquisition of Super Free Games, Stillfront etners the word and trivia genres of casual mobile games segment. The seller has a rapidly growing product portfolio with one established product (Word Collect), one recently launched (Trivia Star), and over 5 highly potential titles in the pipeline, with a big number of MAUs

? Products

Sandbox Interactive — PC & mobile F2P MMORPG developer and publisher

• Sandbox Interactive operates Albion Online, a F2P medieval fantasy sandbox MMORPG

• Albion Online, which we know today, is the result of seven years of iterations and continuous development before full F2P release on PC in 2019 and official mobile release planned in H1 2021

• The in-game population continues to grow, and by September 2020 the number of daily active accounts across all platforms reached 125,000. The game also attracted new players in Asia Pacific Region, due to introducing Chinese and Korean language support to the game

Super Free Games — mobile F2P casual games developer

• Super Free Games (previously known as Super Lucky) has transitioned from social casino to casual genre during 2017-2019

• Nowadays, Super Free is known for such casual titles as Word Collect, Word Nut, and Trivia Star

• Word Collect is company’s most popular title, that was launched in December 2017, and since than it had a stable growth of downloads, that rapidly increased during the pandemic, and reached its peak of 2.8 million downloads in October’20

• Trivia Star was launched in March 2020, and instantly started gaining popularity, reaching 2 million downloads by November’20

? Stillfront’s Latest Acquisitions