Modern Times Group (MTG) has announced the acquisition of 100 percent of Indian mobile word games developer PlaySimple. The up-front consideration is approximately SEK 3.09 billion on a cash and debt-free basis, and performance based earn-out payments amount to an expected value of SEK 1.28 billion in aggregate.
PlaySimple expanded its revenues by 144 percent in the 2020 calendar year to SEK 706 million with an adjusted EBITDA of SEK 154 million. Estimated H1 2021 revenues are SEK 510-540 million, up approximately 82 percent, with a projected EBITDA increase of 140 percent year on year to SEK 145-155 million.
PlaySimple has a live portfolio of nine games, including successful titles such as "Daily Themed Crossword", "Word Trip", "Word Jam" and "Word Wars" with over 75 million installations and 7 million MAU. It has four new games in the pipeline for launch in 2021, and is expanding into the card games genre. Women make up nearly 80 percent of PlaySimple players.
PlaySimple was founded in 2014 by brothers Siddharth Jain and Siddhanth Jain alongside Preeti Reddy and Suraj Nalin. It employs approximately 215 full-time workers.
MTG said that by buying Hutch, Ninja Kiwi and now PlaySimple, it has accelerated the build-up of a gaming vertical since December 2020 with revenues on a pro forma basis of approximately SEK 4.42 billion in 2020 and SEK 1.16 billion in Q1 2021, with about 30 million monthly active users (MAU) and some 6 million daily active users (DAU). The pro forma calculations compare with reported net sales for MTG Gaming of SEK 2.68 billion in FY 2020 and SEK 767 million in the first quarter of 2021.
MTG intends to pay the upfront consideration 77 percent in cash and 23 percent in MTG class B shares and will call an Extraordinary General Meeting (EGM) to vote on the consideration shares
Because of Indian foreign exchange regulations, the acquisition will be done in two steps. The first should be completed on or around 29 July, when MTG will acquire 77 percent of the shares in PlaySimple. The second step will be done after regulatory approval for the founders to receive the share consideration of over 6.19 million class B shares in MTG in exchange for the rest of the shares in PlaySimple. This is equivalent to a value per MTG class B share of SEK 115.16.
The consideration shares will be subject to a 24-month lock-up. If the founders do not obtain approval to receive the consideration shares by 31 October 2023, MTG will buy the remaining shares in PlaySimple for cash equivalent to the value of the consideration shares at that time.
The up-front cash consideration for PlaySimple will be financed via existing cash held by MTG, a secured two-year revolving credit facility of SEK 1.00 billion and a one-year bridge loan facility of SEK 1.00 billion
