Keywords Studios accepts $2.8 billion bid from EQT

Dublin-based video game services group Keywords Studios has agreed to a substantial bid valued at 2.2 billion pounds ($2.8 billion) from European private equity firm EQT. Following the announcement, shares in Keywords Studios, listed on the London Stock Exchange, saw a notable increase, rising by 2.9% to 2,384 pence. The company recommended that its shareholders accept the cash offer of 2,450 pence per share, which represents a significant 66.7% premium over the firm’s last closing price on May 17, prior to the initial bid discussions.

“The board believes that this offer represents a good opportunity for Keywords Studios shareholders to realize value for their investment in cash upfront at a significant premium to the undisturbed share price,” said Keywords Chair Don Robert in a statement.

The bid comes at a pivotal time for Keywords Studios, which has recently faced challenges with lower margins due to a slowdown in content creation trends. Despite these hurdles, the board sees EQT’s proposal as a chance to leverage additional investment and accelerate the company’s growth, aiming to evolve Keywords Studios into a leading global full-scale integrated gaming services provider.

Keywords Studios, known for catering to major clients like Activision Blizzard, Netflix, and Microsoft, offers a wide range of services in the video game industry. These services include game production, localization, and sound effects. However, the company reported that first-half organic growth was impacted by the deferral or cancellation of some larger game development projects, reflecting a slow ramp-up in content production in Hollywood.

EQT expressed confidence in Keywords Studios’ potential, stating, “(EQT) believes that, with the right additional investment, there are significant opportunities for Keywords Studios to increase the pace of its growth and fulfill its long-term potential evolving into a leading global full-scale integrated gaming services provider.”

The offer from EQT, first revealed on Friday, was an improvement over an earlier proposal made two days prior but slightly lower than the 2,550 pence offer disclosed in May. Major Keywords shareholders Franklin Templeton and Pictet have indicated their support for the deal, affirming their intention to vote in favor.