Game on - Ubisoft bid set to launch European gaming M&A to next level

Data InsightDealspeak 16 May

Game on - Ubisoft bid set to launch European gaming M&A to next level

Buyout interest in Ubisoft [EPA:UBI] could trigger a shootout in European gaming, as overseas investors step up their hunt for premium sector assets across the Continent.

A takeover of the publisher of the Assassin’s Creed franchise, whose founding family is reportedly assessing a partnership with private-equity (PE) groups including KKR [NYSE:KKR] and Blackstone [NYSE:BX], would represent the largest European gaming tie-up this year at a current market valuation of EUR 5bn.

The EMEA sector has mustered only insipid deal activity in the year to date (YTD), with volumes of EUR 1.7bn across 29 deals blown out of the water by EUR 4.9bn racked up from 55 deals in the first half of 2021, Dealogic data show.

Action in EMEA had only a small part to play in global gaming activity where 88 deals have netted EUR 86.3bn YTD, scorching past the EUR 13.5bn haul from 128 in the same period in 2021. Most of the major deals have come from the US and included Microsoft’s [NASDAQ:MSFT] USD 75bn seizure of Activision Blizzard and Take-Two Interactive’s USD 12.7bn takeout of Zynga [NASDAQ:ZNGA], which top the leaderboards in 2022, driving the US market to new highs.

Game of console-idation

European targets are already drawing interest overseas, and this is expected to ramp up as the big guns move in. Tencent [HKG:0700] has been particularly trigger-happy so far this year, with European gaming targets firmly in its crosshairs. The Chinese tech group got the green light in January to land UK-based developer Sumo Games, while snapping up a minority stake in France’s Voodoo and picking off Poland’s1C Entertainment.

Previous cross-border deals include mobile games company Playdemic, which was acquired in June 2021 by Electronic Arts [NASDAQ:EA] from Warner Bros for EUR 1.1bn. The deal continued a run of headline-grabbing transactions, including the USD 1.2bn buyout of UK-based Codemasters by Electronic Arts, completed in 2020.

Pay to play

Meanwhile, Europe’s smaller games developers are hoping to capture add-ons to ascend to the next level as multiplayers. Poland’s Ten Square Games [WSE:TEN] recently bagged mobile games developer Gamesture, and remains on the lookout for further gains.

Among a host of acquisitive UK-based developers is Team17 [LON:TM17], which has closed several fundraisers since its IPO, giving shareholders encouragement that it is arming itself to enter the market. Video games service provider Keywords Studios [LON:KWS] also remains ready to pounce and extend its acquisition spree of recent years.

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