TheGamingEconomy’s Daily Digest brings you the prevalent business stories in gaming. In today’s news: EG7 to acquire Daybreak Games; Bigger Games raises USD$6m (£4m); and Krafton completes PUBG consolidation.
EG7 to acquire Daybreak Games
Stockholm-based video game holding company Enad Global 7 (EG7) has announced that it is set to acquire Californian developer publisher Daybreak Games, best known for its Everquest MMORPG and H1Z1 battle royale titles, for a consideration of USD$300m (£224m), USD$200m (£149m) of which will be paid in cash and the remainder in share capital. The purchase price equates to an EBITDA multiple of approximately 9.7x from the USD$31m (£23m) Daybreak is expected to generate by the close of 2020, with EG7 executives citing Daybreak’s diverse IP and 178 million-strong userbase as key reasons behind the acquisition. To finance the buyout, EG7 has secured SEK900m (£78.9m) in debt financing and aims to raise a further SEK1.6bn (£140m) through a direct share issuance, subject to shareholder approval.
The acquisition continues EG7’s recent M&A activity in North America, with the Swedish group having purchased Canadian studios Big Blue Bubble for CAD$16m (£9.2m) in August and Piranha Games for CAD$31.4m (£18.1m) at the close of November. Daybreak Games was also active in August, purchasing PC-console developer Cold Iron Studios from Scopely for an undisclosed sum.
In a statement, Jason Epstein, Executive Chairman of Daybreak Games, commented, “On behalf of the Daybreak team, we are elated to be joining the EG7 family. The combined companies are strategically positioned to expand Daybreak’s unique and iconic portfolio of live games and will help amplify our passion for making great games for our communities. As a long-term shareholder and prospective Board member, I look forward to working closely with management to expand the company’s footprint by identifying opportunities that fit the successful growth plan executed by EG7 over the past few years.”
Bigger Games raises USD$6m (£4m)
Hyper-casual mobile developer Bigger Games has announced that it has raised USD$6m (£4m) in a seed financing round led by Index Ventures and supported by Play Ventures; David Helgason (Unity); and Stephane Kurgan (formerly King). The injection will be used by the Istanbul-based studio to support the development of further titles to add to its portfolio which includes Rope Rescue and Color Rope, as well as for recruitment.
The investment marks the latest support for the expanding Turkish gaming industry, most notably through Zynga‘s acquisitions of Rollic in August and Peak Games earlier in June. According to data compiled in TheGamingEconomy‘s TGE Index, investment in Turkish video games companies totals USD$1.986bn (£1.484bn) since April, representing just over 6% of total recorded transaction value.
Krafton completes PUBG consolidation
South Korean video game holding group Krafton, best known for its PlayerUnknown’s Battlegrounds title, has completed the consolidation of its publishing and support operations previously announced in September, with the development team of subsidiary PUBG Corporation now operating under the PUBG Studio moniker. Additionally, the Seongnam-based firm also revealed that it will be combining two of its mobile subsidiaries, namely Pnix Inc. and Delusion Studio, under a new division termed RisingWings Inc.
The consolidation comes amid suggestions in both domestic and international media that Krafton is preparing for an IPO in the first half of 2021. According to Bloomberg, the company has hired Citigroup, Credit Suisse Group, and JP Morgan Chase & Co. to prepare a floatation at a valuation of approximately £26bn, though estimates vary as to the amount of stock that will be offered, ranging from in the region of ₩1tn (£674.5m) to ₩9.96tn (£6.73bn).