Wakefield’s Team17 in acquisitions for up to £75m

Wakefield-based Team17 Group, the developer of video games and educational entertainment apps, said on Thursday it continued to trade above management expectations through the second half of 2021 — and announced two cash and share acquisitions with a potential total deal value of £75.6 million.

Team17 shares rose about 4% to about £8 to give the Wakefield firm a current stock market value of around £1 billion.

Team17 said it agreed to acquire all rights and assets of Hell Let Loose (HLL) IP for an initial consideration of £31 million plus a contingent earn out consideration of up to a maximum of £15 million.

HLL is an existing Team17 Games Label third-party title “and as a result of the acquisition it will become part of the label’s 1st party portfolio.”

HLL was created by Australian developer Black Matter and is co-developed and published across multiple platforms by Team17.

The game allows players to fight in battles of the Western and Eastern Fronts of World War II and was initially released for Microsoft Windows as an early access title in June 2019, with a full release in July 2021.

HLL was released for PlayStation 5 and Xbox Series X/S in October 2021.

Team17 said: “The acquisition’s initial consideration will be satisfied through a combination of [£19.75] million in cash from existing reserves and the issue of 1,531,780 consideration shares, valued at £11.25 million, based on an issue price of 734.44 pence which are subject to a lock-in period of 12 months from the date of the acquisition.

“Subject to meeting revenue performance targets over the next two years, an additional £5 million, rising to a maximum of £15 million, satisfied in cash, will become payable.

A separate development contract has been agreed to cover the transitional period over the next 18 months which includes delivery of services and significant content to support the next stage of growth in terms of revenue and IP value for the HLL franchise.”

The Wakefield firm also announced the acquisition of The Label, a San Francisco-based indie publisher specialising in mobile subscription games content, for an initial consideration of £17.76 million with additional earn out consideration of up to a maximum of £11.84 million over the next three years.

Team17 said: “The acquisition’s initial consideration will be satisfied through a combination of $18.0 million (£13.32 million) in cash from existing reserves and the issue of 604,543 consideration shares, valued at $6.0 million (£4.44 million), based on an issue price of 734.44 pence which are subject to a lock-in period of 12 months from the date of the acquisition.

“A further potential payment of up to $16.0 million (£11.84 million) will be paid within three years based on meeting challenging EBITDA performance targets, paid through a combination of cash and shares.”

Team17 said The Label acquisition represents a significant strategic milestone, enabling Team17’s Games Label to extend its reach into the high growth mobile subscription segment of the games industry.

In its trading update for the year to December 31, Team17 said: “The company is pleased to report that the group continued to trade above management’s expectations across H2 2021 completing a solid performance in 2021. 

“As a result, revenue and adjusted EBITDA for FY 2021 will be ahead of management’s expectations and ahead of FY 2020 which, as announced previously, received a significant one-off commercial benefit across the whole back catalogue in early 2020, driven by the Covid-19 pandemic.

The company has therefore entered FY 2022 with confidence, supported by a full twelve-month contribution from StoryToys and the acquisitions of The Label and Hell Let Loose IP announced this morning that are jointly expected to deliver high single digit earnings accretion in FY 2022, and the underlying strength and continued momentum of the group’s broader games portfolio.

We continue to monitor the pandemic and the broader macro-economic environment and expect these to remain key considerations across H1 2022 and beyond.”

Team17 CEO Debbie Bestwick said: We are pleased with the 2021 performance, in which we continued to execute on our highly ambitious pipeline alongside completing the acquisition of StoryToys.

“Bringing StoryToys into the Team17 family sees us align our growth ambitions with their hugely talented team and is a clear marker for our future growth strategy.

In addition, we are delighted with the acquisitions announced this morning.

“These  further support our content and people growth plans. We look forward to working with them as part of our growing Team17 Group in 2022.

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.