The Ratings Game: Playtika sweetens offer to acquire Angry Birds publisher Rovio, now offering 60% premium

At about 83 million shares outstanding, Espoo, Finland-based Rovio has a market cap of 470 million euros. The new, non-binding offer of 9.05 euros a share values Rovio at 751.2 million euros, or at a 60% premium.

Back in November, Playtika had offered 8.50 euro per share, and reported having $1.26 billion in cash and cash equivalents. The euro
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+0.31%
is trading about 0.92 euro to the dollar. Since 2009, Rovio has been known for its “Angry Birds” game, and has since grown the initial game into a franchise.

“We firmly believe the combination of Rovio’s renowned IP and scale of its user base, together with our best-in-class monetization and game operations capabilities, will create tremendous value for our shareholders,” said Robert Antokol, Playtika chief executive, in a statement.

Read: Applovin, Unity Software get downgrade as analyst sees mobile game crunch into 2024

Analysts surveyed by FactSet expect Rovio to report 2022 sales of $319.6 million euro, up from the previous year’s $286.2 million

Recently, Goldman Sachs analyst Eric Sheridan, who has a neutral rating and a $15 price target on Playtika, noted the company’s mobile game revenue declined to the negative single-digit percent year-over-year over the holiday period, “but with meaningful variance across the portfolio (as several games are seeing much better/worse trends).”

Analysts surveyed by FactSet expected Playtika to report fourth-quarter earnings of 17 cents a share on revenue of $627.4 million, down from last year’s 25 cents a share on revenue of $649 million.

The mobile gaming and monetization sector has become active lately with AppLovin Corp.
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-4.81%
giving up its quest to merge with Unity Software Inc.
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-5.05%.
Recently, one analyst downgraded Applovin and Unity because he expected headwinds in the mobile game space to last for another two years.

Both Palo Alto, Calif.-based Applovin and San Francisco-based Unity offer marketing, monetization and analytics software that helps app developers grow their businesses. But while Applovin has an apps business that it is treating as a standalone concern and may sell, Unity produces videogame-engine software that competes with Epic Games Inc.’s Unreal Engine.

A year ago, the M&A frenzy for videogame publishers was in full swing after Take-Two Interactive Inc.
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-0.73%
offered to buy Zynga for $12.7 billion, which was quickly followed up by Microsoft’s surprise $69 billion offer for Activision Blizzard Inc. 
ATVI,
-0.51%,
 then Sony’s 
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+0.26%
SONY,
+1.56%
$3.6 billion offer to acquire publisher of the “Destiny” franchise Bungie.

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Even Playtika climbed on the bandwagon last year with an announcement its board was considering a possible sale of the company. Playtika is no stranger to M&A having last acquired a growing majority stake in design app company Reworks in a deal valued up to $600 million back in August 2021.