Keywords Studios PLC (LON:KWS) shares rose on Wednesday as it agreed to acquire g-Net Media Inc, a Los Angeles-based provider of marketing services to the video game and entertainment industries, in a deal worth up to US$32mln.
The AIM-listed firm said under the terms of the deal it will pay an initial consideration of US$14.4mln in cash and the equivalent of US$3.6mln in new shares to the sellers on the first anniversary of the purchase. Deferred consideration of up to US$14mln will also be payable to the sellers in a mix of cash and shares based on performance targets being met by the first and second anniversaries of the acquisition.
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Keywords said the acquisition of g-Net, which has provided services to major game publishers including Activision Blizzard Inc (NASDAQ:ATVI), Microsoft Corp (NASDAQ:MSFT) and Bethesda as well as media giants including Netflix Inc (NASDAQ:NFLX) and Amazon Prime, will further its strategy to become the “’go to’ technical and creative services platform for the global video games industry”.
For the year ended May 31, 2020, g-Net generated net revenues of US$16.3mln and adjusted earnings (EBITDA) of US$2.2mln, while for the calendar year to December 31, 2021, revenues are expected to be around US$20mln and EBITDA around $3mln.
"It's a great pleasure to welcome the g-net team into the Keywords family. This represents a significant milestone as we continue to build our Marketing service business to become the first truly global, video game specialised marketing services company”, Keywords chief executive Andrew Day said in a statement.
“With its well-established position as a valued partner to some of the biggest names in video games, and from its home in Hollywood, g-net brings the number of Keywords specialist marketing studios to seven. Combined, Keywords' annual marketing services revenues are now over €35mln with more than 180 people employed globally. We look forward to working with the wonderful team at g-net as we continue to grow and invest in this important area of our business", the CEO added.
Keywords shares jumped 3.6% to 2,238p in early trading.