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UPDATE: Take-Two Interactive Acquires Codemasters For $994m

M&A | ANNOUNCEMENT DATE: 5 NOV 2020
WRITTEN BY | 12 Nov 2020
UPDATE: Take-Two Interactive Acquires Codemasters For $994m
M&A

đź’µ Acquisition

  • U.S.-based video game giant Take-Two Interactive Software (NASDAQ:TTWO) has entered into an agreement with the Board of Codemasters to acquire UK-based racing games developer Codemasters Group (LON:CDM) for consideration of $994m (ÂŁ759m)

    • The offer consideration is based on $6.39 price per share (an implied equity value);

    • The consideration to be paid ~25% in cash and ~75% in TTWO shares;

    • Transaction valuation multiples are 9.9x Revenue, 43.2x EBITDA based on equity value (or 40.5x adj. EBITDA).

      • Enterprise Value of ÂŁ736.4 is an equity value adjusted for Codemasters’ net cash of ÂŁ23.2m and non-controlling interest of ÂŁ(0.6)m

  • The offer represents a premium of ~38.6% to the closing Codemasters’ share price of 350 pence on the initial date of Take-Two’s initial proposal to Codemasters (22 September 2020)

  • On November 6, 2020, following the official announcement the Codemasters’ shares saw an 8.6% increase, while Take-Two’s shares were up 2.9%

  • The acquisition is expected to be closed in the first quarter of 2021

  • Codemasters’ CEO Frank Sagnier and CFO Rashid Varachia will continue work in the company

Source: Codemasters website

đź’  Strategic Rationale

  • Codemasters’ acquisition offer multiple benefits to Take-Two Interactive:

    • Complementary product portfolio of high-quality Premium & GaaS racing games to the existing 2K publishing label (sports, arcade);

    • Further diversification of gaming portfolio across platforms — increasing presence in mobile and cloud;

    • Cross-selling opportunities for existing customers of Take-Two and Codemasters;

  • Leveraging Take-Two’s expertise in publishing and live operations, Codemasters can significantly improve its financial performance over the next few years

🎲 Products

  • Codemasters is one of the leading video game developers and publishers of racing titles such, as DiRT, GRID, the F1 series, and Project CARS across multiple platforms including PC, console and mobile

    • Despite being focused primarily on PC and Console platforms, Codemasters has several mobile titles, including F1 Mobile Racing, F1 Race stars, Boom! Tanks, and others;

    • The company is also present on the cloud gaming market with GRID featuring as a launch title on Google Stadia release.

Image Credits: Codemasters

💸 Take-Two’s Latest Acquisitions

  • In October 2020, Take-Two acquired Ruffian Games, the developer of the third person shooter Crackdown 2, for an undisclosed sum

  • In September 2020, Take-Two Interactive has acquired NYC-based mobile puzzle games developer Playdots for $192m, expanding its presence in F2P mobile games space

  • In February 2017, Take-Two Interactive acquired Spain-based mobile game studio Social Point for $250m, making a move into F2P mobile games

SOURCES: CODEMASTERS, REUTERS, IR PRESENTATION

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M&A
Take-Two
  • Established in 1993

  • Headquarters — New York City, United States

  • Founded by Ryan Brant

  • Team of 5000+ employees

  • Latest annual report

  • Video game publisher and developer

Codemasters
  • Established in 1986

  • Headquarters – Southam, United Kingdom

  • Team of 700 employees across 4 UK studios (Cheshire, Birmingham, and London)

  • Founded by — David Darling and Richard Darling (brothers)

  • Latest annual report

  • Racing games developer and publisher for Console, PC, and mobile platforms > Key franchises include Formula One, DiRT, GRID, and Project CARS