“Angry Birds” may finally have found right nest

Modern Times MTG AB

17/04/2023 13:07

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
       LONDON, April 17 (Reuters Breakingviews) - The winning
trick of “Angry Birds” is to fire your slingshot at just the
right angle to knock out the squadrons of enemy green pigs
attempting to steal the birds’ eggs. Japanese gaming company
Sega Sammy  6460.T  may have found that position. On Monday,
Sega agreed to pay about 700 million euros in cash for Rovio
Entertainment  ROVIO.HE , the maker of the “Angry Birds”
franchise. The 9.25 offer price is a 63% premium to the closing
price of Jan. 19, when rival suitor Playtika  made a previous
approach. Unlike the hesitance to play ball back then, the Rovio
board has recommended Sega’s offer to shareholders. Half the
investors have preliminarily accepted the deal, and Rovio shares
are near the offer price.
    Sega’s offer doesn’t definitely mean game over. It’s just 2%
above Playtika’s last bid and below Rovio’s 11.50 euro initial
public offering in 2017. But it still values Rovio including net
cash at 11 times this year’s EBITDA, nearly double the average
of European peers Stillfront  SFRG.ST , MTG  MTGb.ST  and
Ubisoft  UBIP.PA . And Rovio’s revenue barely grew in the past
few years, while its EBITDA margin has consistently lagged more
diversified rivals such as Stillfront. While Sega hasn’t given
any number on synergies, its Asian customer base and blockbuster
“Sonic” gaming franchise probably make it a more appealing
partner. Add in the wider slowdown of the mobile gaming industry
– Newzoo estimated consumer spending in the industry fell 6.4%
last year – and Rovio investors may decide they like this bird
in the hand. (By Karen Kwok)

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 (Editing by George Hay and Streisand Neto)
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