Keywords Studios PLC (LON:KWS) has acquired Coconut Lizard Limited, a company providing specialised video game development services, for up to £2mln.
The technical and creative services provider said it will pay an initial consideration of £1.35mln, comprising £990,000 in cash and 19,739 new shares in the company. The remaining £650,000 will become payable in a mixture of cash and shares based on performance targets for Coconut Lizard over the first 12 months post-acquisition.
READ: Keywords Studios initiated at 'buy' by Shore Cap as games industry increases outsourcing
Based in Gateshead, Coconut Lizard provides several services, including game optimisation, game hardening, game porting and middleware integration for the Unreal Engine game development suite, which is used by the popular Fortnite online battle royale game and many others.
Keywords said the purchase will expand its game development engineering services, as well as providing “strong access to game development talent” and furthering its strategy to “become the 'go to' technical and creative services platform for the global video games industry”.
“The Coconut Lizard team will bring further expertise in the Unreal Engine as well as access to talent to our wider team of around 1,000 people working across our Game Development studios internationally”, said Keywords chief executive Andrew Day.
"We expect to complete further acquisitions over the months ahead from the strong and attractive pipeline of opportunities that we are currently reviewing", he added.
"We believe that this deal will not only strengthen the game development service line but will help Keywords address the growing content demand by adding an extra 29 staff members to the Keywords group with key expertise", said analysts at Shore Capital in a note on Friday.
"We believe that [Keywords] has a promising operating outlook within an attractive, growing, sector", the broker added, retaining its 'buy' rating on the stock.
The company's shares rose 1.2% to 1,836p.
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