The prominent European investment company, EQT, is reportedly on the brink of securing a deal for the video game service business, Keywords Studios, with an attractive valuation of £2.2 billion (€2.6 billion). This development would mark yet another acquisition of a London-based firm by a foreign investor. EQT is seeking an agreement on a cash price of £25.5 per share, despite having four of its previous offers turned down by the Keywords board, as stated in a company announcement. The newest deal represents an over 70% premium on Friday’s closing stock price.
The latest offer greatly exceeds the initial bid, and if a robust bid is brought forward, the management at Keywords Studios suggests they may support it and recommend it to their shareholders. The company’s share price closed at £14.70, a 5% rise on Friday. The directors at Keywords continue to believe in their growth plans, which include strategic growth through acquisitions. They also believe EQT would back this approach.
Founded in 1998 and listed on London’s junior Aim market, Keywords Studios employs over 13,000 staff in 26 countries and offers a variety of game-related services, from art design to marketing and testing. High-profile clients including Activision Blizzard, Electronic Arts, and Tencent contribute to its portfolio. It floated in 2013 with a market value of less than £50 million.
Despite its success, the firm’s stock price fell from its peak in September 2021, possibly due to investor’s concerns about certain services, such as translation, potentially being replaced by AI. Keywords reported a 13% rise in revenue to €780 million in 2023, while pre-tax profit tumbled 49% to €35 million. The company also has a footprint in film and TV production but cited the US writers’ strike as the reason behind a €20 million revenue drop in the second half of 2023.
EQT, based in Sweden, ranks among the leading private investment firms, with a history of acquiring UK firms such as Dechra, a specialist in veterinary pharmaceuticals. With €242 billion under its stewardship, EQT’s dialogue with Keywords reflects a growing trend of foreign interest in UK listed companies – the highest seen since 2018, largely due to reduced share prices attracting international investors.
Thoma Bravo, a private equity company from the United States, consented to purchase UK-based cybersecurity firm, Darktrace, in a deal worth £4.3 billion in the month of April. According to the regulations for acquisitions in the UK, EQT has a deadline until 15th June to decide whether to solidify an offer or retract. This information is property of The Financial Times Limited 2024.