STOCKHOLM, Jan 14 (Reuters) – E-sports and gaming group MTG is in talks to buy an unidentified mobile games developer, the Swedish company said on Thursday, as preliminary results showed its fourth-quarter profit rose in line with forecasts.
The company said it had entered a non-binding arrangement with the potential sellers and the initial purchase price – if the deal goes ahead – would be around $130-$150 million.
MTG, which did not give further details about the acquisition target, said the price would correspond to a multiple of around 7.1-8.2 times the target company’s annual core earnings (EBITDA), payable in cash and shares.
It added there could be an additional “earnout” for the sellers, depending on the target company’s performance, but that it would not exceed the initial consideration.
“However, no binding agreement has been entered into and it is not certain that MTG will acquire the contemplated target on these terms or at all,” it said in a statement.
It would be MTG’s latest deal after it said last month it had agreed to buy mobile racing games maker and publisher Hutch Games for up to $375 million to speed up growth and broaden its gaming portfolio.
MTG’s adjusted operating profit (EBITDA) rose to 193 million crowns ($23.1 million) in the fourth quarter from 84 million a year ago, according to Thursday’s preliminary figures, while sales fell slightly to 1.06 billion.
The profit was in line with MTG’s guidance of 375-400 million crowns for the second half of 2020. It added that organic revenues in its e-sport business fell 25%, compared with guidance of a 27-32% drop.
MTG shares were up 2.5% at 1426 GMT.
$1 = 8.3408 Swedish crowns Reporting by Helena Soderpalm. Editing by Mark Potter