Keywords Studios agrees to EQT's $2.8 billion takeover offer

By Louis Goss

Corrects ticker for Swedish private equity firm EQT.

Keywords Studios, the Irish company which develops software used to make video games, has struck a deal with EQT that is set to see it fully-acquired by the Swedish private equity firm in a deal worth GBP2.2 billion ($2.8 billion).

EQT (SE:EQT) is set to pay 2,450 pence cash to acquire all shares in Keywords Studios, marking a 66.7% premium on the software developer's share price on May 17, when formal negotiations between the two companies first started.

Shares in Keywords Studios (UK:KWS), listed on London's small-cap Alternative Investment Market, increased 3% on Tuesday having advanced by 49% in the year-to-date on the back of months of protracted negotiations between the Irish firm and EQT.

The County Dublin-headquartered company, whose software was used to make best-selling games including Fortnite, Assassin's Creed and League of Legends, was first started as a business-software company in 1998 before pivoting into the video games sector in the early-2000s.

EQT was first started in 1994 using investments from Sweden's prominent Wallenberg family, which counts an array of the country's top bankers, industrialists and politicians as members.

If completed, EQT's acquisition will see Keywords Studios become the latest firm to be lifted off London's public markets, following a flurry of deals that have seen a raft of U.K. companies bought-out by bargain-seeking overseas buyers.

In explaining its rationale, EQT said it believes there are "significant opportunities" for Keywords to increase its share of the video game market and to also expand into adjacent media and entertainment markets too.

EQT said it is also able to provide additional capital to fuel Keywords' growth through mergers and acquisitions that could boost the Irish firm's global reach, as the private equity firm argued Keywords will be better placed to invest in technologies including artificial intelligence as a privately-owned company.

Shares in Keywords Studios had previously suffered due to investors' concerns about the threat to the Irish companies business posed by developments in AI technologies.

Keywords Studios, which first floated on public markets in 2013, is currently one of the largest and fastest-growing companies on London's AIM having pursued growth through a series of acquisitions, including that of The Multiplayer Group for GBP76.5 million in December 2023.

The Irish company was started by former Microsoft employee Giorgio Guastalla and his wife Teresa Luppino in the Dublin suburb of Leopardstown.

Keywords chair Don Robert said the company believes it will benefit from EQT's "deep industry network" and "operational expertise" as he noted the Swedish firm has " significant experience in technology services and a proven track record in supporting... high-growth businesses."

Berenberg's analysts, led by William Larwood, described EQT's offer as "fair," even though " some investors may deem the offer a little opportunistic given cyclical pressures and the de-rating due to artificial intelligence."

-Louis Goss

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