Keywords Studios PLC (LON:KWS) shares jumped in late-morning trading Monday after it “substantially” expanded its engineering services line through the acquisition of Studio Gobo Ltd and Electric Square Ltd.
The AIM-listed video game development services provider said the acquisitions, which it purchased for £26mln, would add “considerable” expertise to its video game development business while also expanding its global game development team to 610 people.
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Gobo and Electric Square, which offer services such as full game development, downloadable content packages, and porting services to different platforms, have previously worked on projects for large game development studios such as Ubisoft and Microsoft.
Keywords added that the acquisition was expected to be earnings enhancing in the first year, with an initial consideration of £10.5mln in cash and 254,529 new shares, which will be issued on the anniversary of completion.
The remaining £11mln, to be paid either in cash or in a mixture of cash and shares, was subject to a “substantial” increase in the Gobo/Electric studios’ underlying earnings (EBITDA) over the 12-month period following completion, although the scale of the increase was not disclosed.
The acquisition will be the latest in a long line for the company as it seeks to build its service offering, having acquired 11 businesses in 2017 and seven in 2018 prior to this latest purchase.
Andrew Day, chief executive of Keywords, said the latest acquisitions together with its previous purchases would allow the company to have “greater visibility of games in the pipeline, at the outset of their development”, adding that Studio Gobo and Electric Square would “significantly enhance [Keywords’] game development services in both scale and expertise”.
Keywords shares were up 4.7% at 1,854p.
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