Dublin-based video game services group Keywords Studios has agreed to a bid worth £2.2 billion from European private equity firm EQT, saying today it saw significant growth opportunities under EQT’s ownership.
London-listed Shares in Keywords rose 2.9% to 2,384 pence in early trade.
Keywords said it would recommend shareholders accept the 2,450 pence per share cash bid, which is priced at a 66.7% premium to the firm’s last close on May 17, before the two companies first said they were in bid talks.
“The board believes that this offer represents a good opportunity for Keywords Studios shareholders to realise value for their investment in cash upfront at a significant premium to the undisturbed share price,” Keywords Chair Don Robert said in a statement.
The bid recommendation comes at a time Keywords, which caters to the likes of Activision Blizzard, Netflix and Microsoft, has warned of lower margins amid slower content creation trends.
“EQT believes that, with the right additional investment, there are significant opportunities for Keywords Studios to increase the pace of its growth and fulfil its long-term potential evolving into a leading global full-scale integrated gaming services provider,” the joint statement added.
Keywords, which provides services to the video games industry including producing games or parts of games for other developers, translating games into different languages, and providing sound effects, said last week first-half organic growth was dented by the deferral or cancellation of some larger game development projects.
This partly reflected a slow ramp-up in content production in Hollywood, it said.
The agreed offer, first disclosed on Friday, was higher than a proposal made two days earlier but lower than the 2,550 pence offer disclosed in May.
Keywords shareholders Franklin Templeton and Pictet have indicated they will vote in favour of the deal, both firms said.
The deal comes at a time when the pace of global buyout activity led by private equity firms surged 41% to $286 billion during the first half.
The offer must be approved by shareholders representing at least 75% of the votes cast at Keywords’ forthcoming general meeting.
The emergence of streaming models and the shift to mobile have increased growth opportunities for the video gaming market and made companies in the industry attractive as buy-out targets.
Keywords shares have lost about 30% from a record high of £33.16 in September 2021.
