Take-Two Interactive Software Acquires
Mobile Game Developer Social Point
February 1, 2017 6:00 AM
ET
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
NEW YORK--(BUSINESS WIRE)--Feb. 1, 2017--
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.
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