Take Two, Cut! The developer of the mobile games Dots, Two Dots, and Dots & Co has reached an agreement with Take Two Interactive and now Playdots is considered acquired. The deal is concluded at $192M which Take Two Interactive will pay in $90 million cash and remaining $102 million in newly issued Take Two shares.
In the acquisition announcement, Take Two, which is best known for game franchises like BioShock and NBA 2k, and also being a subsidiary of Rockstar’s GTA and Red Dead Redemption, says that Erfat and his leading role and team of 70 people will stay intact.
Playdots has published super-hit games that have been downloaded more than 100 million times, and the most popular title among these games is the Two Dots which alone has more than 80 million downloads.
The deal between the two also has an uncommon feature, the deal consideration, which you can read more about it here, is paid without any earn-out payment, an unusual practice among other acquisitions performed by publicly-traded gaming companies. Nevertheless, this deal should consolidate Take Two Interactive positions in the realm of casual and free to play a segment of the mobile market.
The interesting thing about the deal is that Take Two has actively used stock to acquire Playdots, while the share price is at its maximum level. A 70% increase in the share price is recorded since March this year; from $100 to $177.
When seeing the figures provided by AppMagic, Playdots has in-app net revenue of $26M over a year. The total gross booking revenue reaches $55-$65m when in-app revenue accounts for approximately 60-70%.
Take Two Interactive is holding a great strategic rationale position in the stocks but a question looms that why would it buy a mobile gaming developer with $50m annual gross booking revenue? The answer lies in the diversification of revenue stream via mobile platforms and secondly, Take Two is expecting further growth in Playdots considering that the studio is a strong player in the domain of casual mobile gaming and has some new projects in the pipeline. Here’s a deal that can yield a lot of revenue for Take Two and a lot of fun for consumers.
Reinout is a games investor and strategic business consultant specializing in the games industry. Reinout established his credentials through his own successful investments, start-ups, consulting and (advisory) board positions that led through time to strong bonds with key stakeholders in this fast paced industry. He is known for his outstanding results in the gaming industry. He has worked with many game studios around the globe and is therefore well known in the international gaming industry.
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