Consideration of $250 million in cash and
stock, plus earn-out of up to $25.9 million
Further diversifies Take-Two’s business and
significantly enhances Company’s position in free-to-play mobile
games market
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today
announced that it has acquired privately-held Social Point S.L. for
$250 million, comprised of $175 million in cash and 1,480,168
unregistered shares of Take-Two 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 on January 26, 2017), plus potential earn-out consideration
of up to an aggregate of $25.9 million in cash and shares of
Take-Two common stock. The cash portion was funded from Take-Two’s
cash on hand.
Founded in 2008 and headquartered in Barcelona, Spain, Social
Point is a highly-successful free-to-play mobile game developer
that focuses on delivering high-quality, deeply-engaging
entertainment experiences. Social Point is led by an experienced
senior management team, including Horacio Martos and Andrés Bou,
Co-Chief Executive Officers and Founders, and Marc Canaleta, Chief
Technology Officer and Co-Founder, and has over 270 employees.
Social Point currently has multiple profitable titles in the
market. The company’s two most successful games, Dragon City and
Monster Legends, have been downloaded more than 180 million times
to date on iOS and Android platforms and consistently have charted
in the top-100 grossing mobile games in the United States since
2014.(1) In addition, Social Point has a robust development
pipeline with a number of exciting games planned for launch over
the next two years. Social Point’s games currently are available in
North America, Latin America and EMEA, and approximately 50% of its
revenue is derived from the United States. In 2016, over 90% of its
revenue was generated from mobile platforms.
Management Comments
“With the acquisition of Social Point, Take-Two has further
diversified its business, expanded its portfolio of owned
intellectual property, and significantly enhanced its position in
the fast-growing free-to-play mobile gaming space,” said Strauss
Zelnick, Chairman and CEO of Take-Two. “The experienced team at
Social Point shares our commitment to delighting consumers with
high-quality entertainment, and we believe that Social Point’s
deeply-engaging mobile offerings will be a perfect complement to
our business. Social Point is one of the few mobile game developers
that has a proven track record of growing revenues and delivering
multiple hits, and we expect this growth to continue given the
company’s exciting development pipeline. We are fortunate to have
acquired Social Point in a transaction that is expected to be
immediately accretive to net cash provided by operating activities,
and to be accretive to net income per share, excluding transaction
costs and amortization of intangible assets, in fiscal 2018.”
“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 Horacio Martos
and Andrés Bou, Co-Chief Executive Officers and Founders of Social
Point. “We are thrilled to have Social Point become part of an
organization that shares our commitment to quality and innovation,
and we look forward to being part of Take-Two’s continued success
for many years to come.”
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 ended
December 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 ending
March 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 in the 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 in Asia.
- 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 January 21,
2017. Top-100 Grossing games in the U.S. App Store calculated at
the end of 2014, 2015, and 2016. Excludes the casino genre.
(2) According to estimates from the
International Development Group.
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 on January 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.
- 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 December 31, 2016, after the market
close on Tuesday, February 7, 2017. The Company plans to hold a
conference call to discuss both its results and the Social Point
acquisition at 4:30 p.m. Eastern Time on February 7, 2017, which
can be accessed by dialing (877) 407-0984 or (201) 689-8577. A
live, listen-only webcast and a replay of the call will be
available at http://ir.take2games.com/.
About Take-Two Interactive
Software
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.
All trademarks and copyrights contained herein are the property
of their respective holders.
Cautionary Note Regarding
Forward-Looking Statements
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 SEC, which can be
accessed at www.take2games.com. All forward-looking statements are
qualified by these cautionary statements and apply only as of the
date they are made. The Company undertakes no obligation to update
any forward-looking statement, whether as a result of new
information, future events or otherwise.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170201005224/en/
Take-Two Interactive Software, Inc.Investor
RelationsHenry A. Diamond, 646-536-3005Senior Vice
PresidentInvestor Relations & Corporate
CommunicationsHenry.Diamond@take2games.comorCorporate PressAlan
Lewis, 646-536-2983Vice PresidentCorporate Communications &
Public AffairsAlan.Lewis@take2games.com
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