Sweden's MTG in talks to buy a mobile games developer

Modern Times MTG AB

14/01/2021 14:49

STOCKHOLM, Jan 14 (Reuters) - E-sports and gaming group MTG
 MTGb.ST  is in talks to buy an unidentified mobile games
developer, the Swedish company said on Thursday, as preliminary
results showed its fourth-quarter profit rose in line with
forecasts. 
    The company said it had entered a non-binding arrangement
with the potential sellers and the initial purchase price - if
the deal goes ahead - would be around $130-$150 million.
    MTG, which did not give further details about the
acquisition target, said the price would correspond to a
multiple of around 7.1-8.2 times the target company's annual
core earnings (EBITDA), payable in cash and shares.
    It added there could be an additional "earnout" for the
sellers, depending on the target company's performance, but that
it would not exceed the initial consideration. 
    "However, no binding agreement has been entered into and it
is not certain that MTG will acquire the contemplated target on
these terms or at all," it said in a statement.
    It would be MTG's latest deal after it said last month it
had agreed to buy mobile racing games maker and publisher Hutch
Games for up to $375 million to speed up growth and broaden its
gaming portfolio.  urn:newsml:reuters.com:*:nL8N2IP212
    MTG's adjusted operating profit (EBITDA) rose to 193 million
crowns ($23.1 million) in the fourth quarter from 84 million a
year ago, according to Thursday's preliminary figures, while
sales fell slightly to 1.06 billion.
    The profit was in line with MTG's guidance of 375-400
million crowns for the second half of 2020. It added that
organic revenues in its e-sport business fell 25%, compared with
guidance of a 27-32% drop.
    MTG shares were up 2.5% at 1426 GMT.
    ($1 = 8.3408 Swedish crowns)

 (Reporting by Helena Soderpalm. Editing by Mark Potter)
 ((helena.soderpalm@thomsonreuters.com; +46 8 700 10 15; Reuters
Messaging: helena.soderpalm.reuters.com@reuters.net))