Jasper Jolly 

London-listed Keywords Studios says it will accept £2bn offer

Video game services company backs EQT private equity bid in latest foreign move on UK-listed firm
  
  

Man holding a smartphone and playing the Fortnite game
Keyword Studios has provided services to the developers of some of the world’s biggest games, including Fortnite, Clash of Clans and Assassin’s Creed. Photograph: Volodymyr Kalyniuk/Alamy

The video game services company Keywords Studios has said it would be willing to accept a £2bn buyout offer, in the latest foreign takeover of a London-listed business.

Shares in the Dublin-headquartered Keywords jumped 62% on Monday morning after it said it would be minded to recommend an offer from the Swedish private equity investor EQT Group.

The company is listed on the London Stock Exchange’s Alternative Investment Market (Aim). It has grown to become one of the biggest businesses on the junior market by providing services to the developers of some of the world’s biggest games, including Fortnite, Clash of Clans, League of Legends and Assassin’s Creed.

A takeover would add to the growing list of companies leaving the London Stock Exchange, amid concerns in the City of London over whether UK companies are undervalued. The retailer Hotel Chocolat and the asset manager Gresham House are two of the most recent Aim-listed companies that have been bought out.

EQT has offered £25.50 a share for Keywords, 70% above its closing price of £14.70 on Friday, although well below its peak during the pandemic tech bubble of more than £33. Shares were trading at £23.78 after rising on Monday.

The offer, if confirmed, would value Keywords at more than £2bn. EQT has until 15 June to make a firm offer or walk away.

Keywords revealed that there had been a protracted courtship, with four unsolicited offers rejected. The company said the latest offer was “a significant increase from the initial proposal”, although it did not say what the first offer was.

The business was founded in 1998 to help business software developers translate their products for release in other countries. In the early 2000s, it shifted focus towards games, and has since ridden the huge expansion in the size of the global industry, which far exceeds other entertainment sectors such as Hollywood or the music industry. It listed its shares in 2014.

Keywords said it was “confident in the company’s growth strategy of building the only truly global platform providing solutions to the video games and entertainment industries, both organically and through acquisitions, and EQT is supportive of this strategy”.

Katie Cousins, an analyst at Shore Capital Markets, an investment bank, said Keywords’s share price had dropped as tech valuations “normalised” from the excesses of the pandemic era, and as investors fretted about the possibility of artificial intelligence threats to its business model.

However, she added that the company has a “leading status” in its field, with big-name clients and services that should benefit as the industry grows.

Those services include producing games in whole or in part for other developers, producing voice and sound effects for games, translating games into different languages, and porting games between different platforms such as Microsoft’s Xbox and Sony’s PlayStation.

 

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