TIDMKWS
RNS Number : 7322F
Keywords Studios PLC
22 May 2017
22 May 2017
Keywords Studios plc ("Keywords", "the Group")
Acquisition of Red Hot CG
Expansion of Art Service Line and further growth in Asia
Keywords Studios, the international technical services provider
to the global video games industry, today announces the acquisition
of 100% of Strongbox Ltd, a holding company with subsidiaries in
China and Indonesia trading under the Red Hot CG ("Red Hot") brand.
Red Hot are specialists in the production of graphical art assets
for video games.
The acquisition of Red Hot is in line with Keywords' strategy of
growing both organically and by acquisition. It will increase the
capacity of Keywords' fast growing and higher margin Art Service
Line, as well as bringing a number of attractive new clients to the
art business at Keywords.
Founded in 2010 by Daniel Staton, Red Hot's operating hub is in
Shanghai with satellite studios in the lower cost locations of
Chengdu, Dalian and Zhengzhou in China plus Yogyakarta in
Indonesia. This hub and spoke model gives the company the advantage
of broader access to the Chinese pool of video game art talent,
which is the largest in the world, while maintaining control and
providing international business access through Shanghai. It has
220 artists which, when added to Keywords existing 900 artist
employees and contractors, will increase the Group's art production
capacity by approximately 25%.
Red Hot has a strong client base, including many of the game
development studios of Activision as well as Sony, Bethesda,
Tencent and Capcom, which will complement Keywords' existing Art
Service Line client base.
Daniel Staton (CEO), Leo Ling (COO), Claas Grimm (CRO) and the
rest of the management team will remain with Red Hot, bringing many
years of video game industry experience and art production
expertise to the Art Service Line. They will continue to run Red
Hot whilst working closely with the other Art studios in the Group
to bring additional services and production capacity to their
existing and prospective clients.
Under the terms of the acquisition, which is expected to be
earnings enhancing in the current year, Keywords is paying a total
consideration of $6.0 million for 100% of Red Hot. This is being
satisfied by $4.35m in cash, $1.0m of which is deferred until the
third anniversary of acquisition, funded from the Group's existing
resources. The remainder is being satisfied by the issue of 160,842
new ordinary shares in Keywords, which will be issued to the
Sellers on the second anniversary of the acquisition.
In the year ended 31 December 2016, the Red Hot businesses
generated revenues of $5.4m and underlying pre-tax profit of $0.9m.
Good further growth is expected in 2017.
Andrew Day, Chief Executive of Keywords, commented:
"The acquisition of Red Hot further strengthens our fast
growing, higher margin art services business, enhancing our unique
client proposition which combines operations close to our clients,
in the US and Canada, with those in lower cost locations across
Asia. Following the acquisition, we believe the Keywords Art
Service Line is the leading player in the outsourced market in
terms of capacity and breadth of service. We warmly welcome Red
Hot's highly talented teams to the growing Keywords family and we
look forward to continuing to build upon its excellent reputation
and loyal client base as part of the Group."
Daniel Staton, CEO of Red Hot Studios commented:
"We are delighted to be joining the Keywords Group as we
continue to grow our business. We believe that combining forces
with Keywords' Mindwalk studio in China as well as leveraging the
overall resources of the wider Keywords Group will enable us to
accelerate our development and provide wider opportunities to all
members of the Red Hot team."
For further information, please contact:
Keywords Studios (www.keywordsstudios.com)
Andrew Day, Chief Executive
Officer
David Broderick, Chief Financial
Officer +353 190 22 730
Numis (Financial Adviser)
Stuart Skinner / Kevin Cruickshank
(Nominated Adviser)
James Black/Tom Ballard (Corporate
Broker) 020 7260 1000
MHP Communications (Financial
PR)
Katie Hunt / Ollie Hoare 020 3128 8794
About Keywords Studios (www.keywordsstudios.com)
Keywords Studios is an international technical services provider
to the global video games industry. Established in 1998, and now
with facilities in Dublin, Rio de Janeiro, Montreal, Quebec City,
Portland, Mexico City, Los Angeles, Seattle, Tokyo, Singapore, New
Delhi, Pune, Rome, Milan, Barcelona, Madrid, Taipei, Shanghai,
Beijing, Manila, Hamburg, Paris and London, it provides integrated
art creation, localisation, testing, audio and customer care
services across 50 languages and 14 games platforms to a blue chip
client base in more than 15 countries. It has a strong market
position, providing services to 21 of the top 25 most prominent
games companies, including Activision Blizzard, Bandai Namco,
Bethesda, Electronic Arts, Konami, Riot Games, Sony, Square Enix,
Supercell, TakeTwo, and Ubisoft. Recent titles worked on include
Uncharted 4: A Thief's End, Call of Duty: Infinite Warfare, Mortal
Combat X, Assassin's Creed Syndicate, Battlefield 1, World of
Warcraft: Legion, Hearthstone, Clash Royale, and Mobile Strike.
Keywords is listed on AIM, the London Stock Exchange regulated
market (KWS.L).
About Red Hot CG (www.redhotcg.com)
Red Hot CG was founded in Shanghai in 2010 by Daniel Staton. The
company is a proven 2D, 3D and animation art provider to the global
video games market with clients in the US, Europe, China and Japan.
After its inception Red Hot CG expanded through organic growth to
secondary cities in China - Zhengzhou, Chengdu, Dalian - and to
Yogyakarta, Indonesia. Red Hot CG found early success contributing
to popular projects like Tomb Raider and God of War: Ascension, and
most recently to franchise tentpoles including Call of Duty: Black
Ops 3, Call of Duty: Infinite Warfare, Fallout 4, Uncharted 4, and
Far Cry Primal. Red Hot CG has also provided art services to
breakout new IPs like Ubisoft's For Honor and Guerrilla Games'
Horizon: Zero Dawn.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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