“Angry Birds” buyout may have more levels to beat

Modern Times MTG AB

20/01/2023 12:58

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
       LONDON, Jan 20 (Reuters Breakingviews) - Remember “Angry
Birds”? Finland-listed Rovio Entertainment  ROVIO.HE  has
used the round-headed creatures to create a long series of
mobile games, two films, plush toys and more. Now the company is
the target of a takeover offer from larger U.S.-listed rival
Playtika  PLTK.O . The saga may have more levels to go. 
    Playtika, which makes games such as “Pirate
Kings”, suddenly offered on Thursday to buy Rovio for 683
million euros, or 9.05 euros a share, a 60% premium to Rovio’s
closing share price that day. That trumps its previous 8.50 euro
a share November bid. Taking into account Rovio’s
roughly 186 million euros of net cash, the improved bid values
the group’s enterprise at 1.5 times its expected
2023 sales. That’s just above an average 1.3 times sales
multiple for European rivals Stillfront  SFRG.ST  and MTG
 MTGb.ST . 
    There’s an argument for offering more. Gaming giants are
looking to bulk up in the fast-growing mobile space: Take-Two
Interactive Software  TTWO.O  last year bought “FarmVille” maker
Zynga for $13 billion. Meanwhile, privacy changes on Apple’s
iPhone have made it more difficult to target specific users with
ads for new games. That makes strong long-time brands like
“Angry Birds” more attractive.  
    Investors aren’t quite convinced, though. Rovio’s share
price was hovering around 7.50 euros on Friday morning, or 20%
below Playtika’s bid. That’s probably because Rovio’s
board, which said it learnt about the offer “nearly
simultaneously” with its public release, sounded unimpressed. It
curtly announced that it would evaluate the proposal. With
revenue roughly flat since 2017, Rovio is ripe for a turnaround.
That may entice other, more friendly predators.  (By Oliver
Taslic) 
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 (Editing by Lisa Jucca and Streisand Neto)
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