A £2.2 billion by private equity bid for Keywords Studios PLC (AIM:KWS, OTC:KYYWF) would unwind the damage done to the stock over the past year by the apparent (rather than real) threat posed by artificial intelligence, according to American bank Citi.
Over the past year, investors have been fretting that Keywords' position as a provider of support services to the video games industry will be undermined by automation. Shares slid more than 60%.
It was revealed on Monday that EQT Group has tabled at 2,550p a share bid, which effectively turns the clocks back to the valuation of early 2023.
"It is difficult to gauge exactly the motivation for the deal, but in practical terms this deal - if completed - would reverse the underperformance seen since the emergence of AI-related concerns in May 2023," Citi said in a note entitled Waking Up from the Bad AI Dream.
"This is a surprising development not so much because it has happened or the offer price, but rather because it signals significant confidence on behalf of the mooted buyer that upstream pressures on video game development spend will lift. In this context, this is not only positive for Keywords but the broader landscape."
In afternoon trading, the shares were changing hands for 2,296p.