Take-Two Interactive Software Acquires Mobile Game Developer Social Point
Consideration of
Further diversifies Take-Two’s business and significantly enhances Company’s position in free-to-play mobile games market
Founded in 2008 and headquartered in
Management Comments
“With the acquisition of
“Take-Two is one of the interactive entertainment industry’s premier
publishers, whose labels are renowned throughout the world for their
ability to create some of the most successful and beloved entertainment
experiences on consoles and PC,” added
Strategic Rationale
-
Acquisition further diversifies Take-Two’s business and should
meaningfully enhance the Company’s revenues from recurrent consumer
spending. The acquisition of
Social Point expands Take-Two’s portfolio of owned intellectual property and significantly enhances the Company’s position in the free-to-play mobile games market, which is the world’s highest-grossing video game segment with gross revenues estimated to be in excess of$40 billion in 2016, and significant growth across all regions.(2) Take-Two expects Social Point’s high-quality, deeply-engaging free-to-play mobile offerings to provide consistent revenue from recurrent consumer spending throughout the year, and to meaningfully enhance and further diversify Take-Two’s already strong revenue from recurrent consumer spending. -
Acquisition is expected to be immediately accretive to net
revenue and net cash provided by operating activities, and to be
accretive to net income per share, excluding transaction costs and
amortization of intangible assets, in the fiscal year ending
March 31, 2018 .Social Point has been consistently profitable since 2013 and has grown net revenue at a 29% CAGR from 2013 through 2016. For the trailing 12-months endedDecember 31, 2016 ,Social Point generated net revenue of$90.8 million and EBITDA of$19.9 million . Take-Two expects that Social Point’s business will continue to grow in the fiscal year endingMarch 31, 2018 . -
Social Point’s business, which is focused on high-quality,
deeply-engaging mobile games, should be a perfect complement to
Take-Two’s core games business.
Social Point produces high-quality entertainment that can attract and retain a loyal, highly-engaged player base and deliver sustainable results.Social Point focuses on “mid-core” games that feature greater gameplay depth than casual games, and the company’s titles typically monetize and retain players at higher rates than its competitors in this segment. -
Social Point has multiple hit titles that continue to deliver stable results. Since 2014, Dragon City and Monster Legends have consistently been included in the App Store’s top-100 grossing mobile games inthe United States ,(1) and have continued to deliver stable revenues and profits from a steady level of monthly average users. -
Social Point has strong growth prospects.Social Point has a robust development pipeline with a number exciting games planned for launch over the next two years. In addition,Social Point has growth opportunities through geographic expansion, as its current games have not yet been released inAsia . -
Social Point has a proven senior management team with significant experience and a track record of producing multiple hits in the free-to-play mobile games market.Social Point is one of only six publishers that have had at least two games simultaneously in the App Store’s annual top-100 grossing mobile games chart every year since 2014.(1) -
Social Point brings a cutting-edge, proprietary data analytics platform and experienced data analytics team.
(1) Source: AppAnnie data as of
(2) According to estimates from the
Acquisition Terms
-
Take-Two acquired all of the outstanding share capital of
Social Point for$250 million , comprised of$175 million in cash and 1,480,168 unregistered shares of its common stock (calculated by dividing$75 million by the average closing price per share on the Nasdaq Global Select Market during the thirty trading day period ending onJanuary 26, 2017 ). Take-Two entered into a registration rights agreement pursuant to which it agreed to register the shares issued for resale. - The cash portion was funded from Take-Two’s cash on hand.
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The founders of
Social Point will remain with the company following the closing and are eligible to receive earn-out consideration of up to an aggregate of$25.9 million in cash and shares of Take-Two common stock, contingent on Social Point’s business achieving certain EBITDA targets over the 12 and 24 month periods following the closing.
Conference Call
Take-Two plans to report financial results for the third quarter of its
fiscal year 2017, ended
About
Headquartered in New York City, Take-Two Interactive Software, Inc. is a leading developer, publisher and marketer of interactive entertainment for consumers around the globe. The Company develops and publishes products through its two wholly-owned labels Rockstar Games and 2K. Our products are designed for console systems and personal computers, including smartphones and tablets, and are delivered through physical retail, digital download, online platforms and cloud streaming services. The Company’s common stock is publicly traded on NASDAQ under the symbol TTWO. For more corporate and product information please visit our website at http://www.take2games.com.
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The statements contained herein which are not historical facts are
considered forward-looking statements under federal securities laws and
may be identified by words such as "anticipates," "believes,"
"estimates," "expects," "intends," "plans," "potential," "predicts,"
"projects," "seeks," “should,” "will," or words of similar meaning and
include, but are not limited to, statements regarding the outlook for
the Company's future business and financial performance. Such
forward-looking statements are based on the current beliefs of our
management as well as assumptions made by and information currently
available to them, which are subject to inherent uncertainties, risks
and changes in circumstances that are difficult to predict. Actual
outcomes and results may vary materially from these forward-looking
statements based on a variety of risks and uncertainties including: our
dependence on key management and product development personnel, our
dependence on our Grand Theft Auto products and our ability to develop
other hit titles, our ability to successfully integrate Social Point’s
operations and employees, the timely release and significant market
acceptance of our games, the ability to maintain acceptable pricing
levels on our games, and risks associated with international operations.
Other important factors and information are contained in the Company's
most recent Annual Report on Form 10-K, including the risks summarized
in the section entitled "Risk Factors," the Company’s most recent
Quarterly Report on Form 10-Q, and the Company's other periodic filings
with the
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Source: Take-Two Interactive
Take-Two Interactive Software, Inc. Investor Relations Henry A. Diamond, 646-536-3005 Senior Vice President Investor Relations & Corporate Communications Henry.Diamond@take2games.com or Corporate Press Alan Lewis, 646-536-2983 Vice President Corporate Communications & Public Affairs Alan.Lewis@take2games.com