UPDATE: Stillfront Group Has Completed The Acquisition Of 78% Of The Shares In Nanobit

? Acquisition

• Stockholm-based mobile-focused games developer and publisher Stillfront Group (OM:SF) has completed the First Tranche Transaction of the 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 of the First Tranche Transaction was comprised of:

  • $30m worth of Stillfront’s newly issued shares paid to Nanobit founders Alan Sumina and Zoran Vučinić

  • $70m in cash paid to all the sellers, which includes both founders as well as certain key employees

• As a result of the First Tranche Transaction, the Nanobit founders hold together about 0.81% of the outstanding shares and votes in Stillfront, with the current Stillfront shareholders experiencing the 0.81% dilution

• The remaining 22% of Nanobit would be acquired in a Second Tranche Transaction in 2023 for up to $48m on a cash and debt-free basis, based on Nanobit’s EBITDA development throughout FY 2021 and 2022

• To date, Stillfront and Nanobit’s founders have entered into shareholder’s agreement, as well as a share pledge agreement, until the Second Tranche Transaction

• 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 Nanobit’s forecast for 2020

? 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

• In a period of January — June 2020, Nanobit has a preliminary unaudited IFRS net revenue of roughly $37m and adjusted EBIT of about $7m

*Based on the USD/SEK exchange of 8.71 (average Aug’20)

Products

• Nanobit is a mobile game developer and publisher with a focus on narrative lifestyle RPG for the 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