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

Playtika Holding Corp. sweetened its all-cash offer for “Angry Birds” publisher Rovio Entertainment Corp. by a little more than 6% on Thursday.

Coincidentally, Playtika
PLTK,
-0.83%

shares fell as much as 6% to an intraday low of $9 a share, and were last down 2.7%. Rovio
ROVIO,
-2.49%

shares closed down 2.5% at 5.67 euros a share in Helsinki about an hour before Playtika made the announcement. Meanwhile, the S&P 500 index
SPX,
-0.48%

declined 0.7%, and the tech-heavy Nasdaq Composite Index
COMP,
-0.66%

was down 1%.

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
EURUSD,
+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.
APP,
-4.81%

giving up its quest to merge with Unity Software Inc.
U,
-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.
TTWO,
-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 
6758,
+0.26%

SONY,
+1.56%

$3.6 billion offer to acquire publisher of the “Destiny” franchise Bungie.

Read: Cloud software is a ‘fight for a knife in the mud,’ and Wall Street is souring on the one sector that was winning

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.

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