THQ Nordic announced today in a press release that the company acquired 100% of the share capital in German publisher Koch Media.
The acquisition also includes Deep Silver and its intellectual property like Saints Row, Dead Island, and Metro.
Below you can read a full breakdown of the deal directly from the press release.
- The total consideration for 100 percent of the share capital in Koch Media amounts to EUR 121 million on a cash and debt free basis, equivalent to an equity value of EUR 91.5 million.
- EUR 66 million of the consideration, equivalent to approximately SEK 658 million, will be paid in a first instalment at closing of the transaction through a cash payment to the Seller and is financed through the group’s current cash balance.
- EUR 16 million of the consideration, equivalent to approximately SEK 159 million, will be paid in a second instalment, no later than August 14, 2018, through a cash payment financed through the Company group’s current cash balance. Lars Wingefors AB has guaranteed the payment of the second instalment, in total amounting to EUR 16 million. Lars Wingefors AB will not receive any consideration for the guarantee.
- EUR 9.5 million of the consideration, equivalent to approximately SEK 94 million, will be paid by issuing promissory notes to be offset against 987,965 newly issued B shares in THQ Nordic no later than on June 15, 2018 (the “Consideration Shares”). The Consideration Shares will represent 1.2 percent and 0.6 percent of the total number of outstanding shares and votes in THQ Nordic, respectively, on a fully diluted basis. 649,977 of the Consideration Shares will be subject to a one-year lock-up and 337,988 of the Consideration Shares will be subject to a two-year lock-up.
- The share issue is conditional upon, inter alia, approval by THQ Nordic’s Annual General Meeting. Lars Wingefors AB and Xagonus AB (a company controlled by THQ Nordic’s CFO Erik Stenberg) have committed to vote in favour of the proposed share issue at the Annual General Meeting. Together they represent approximately 55.3 percent of the capital and approximately 71.8 percent of the votes in THQ Nordic. Lars Wingefors AB has guaranteed delivery of the Consideration Shares, in total amounting to EUR 9.5 million. Lars Wingefors AB will not receive any consideration for the guarantee.
- Closing of the Transaction is expected to take place later today, i.e. on 14 February 2018, and all conditions for completion will therefore be fulfilled. Koch Media will be consolidated into THQ Nordic’s financial statements per February 2018.
- Koch Media currently has on-going financing arrangements with a number of financing institutions who have pre-committed to keeping the existing agreements in place post-transaction. Post-transaction, the new combined group will have working capital facilities of approximately SEK 800 million in place.
- Following closing of the Transaction, THQ Nordic will re-assess its capital structure and explore potential debt financing possibilities in order to continue to be active in value enhancing acquisitions.
- Following closing of the transaction, Koch Media will continue to operate as a separate entity within the THQ Nordic group. Focus for the group will be to deliver on the full pipelines of THQ Nordic and Koch Media. No restructuring or cost saving programmes are planned.
- THQ Nordic’s board of directors will propose a change of name of the listed entity well ahead of the Annual General Meeting scheduled for May 16, 2018 in order to better reflect the new group structure. The names of both operational companies will remain unchanged, i.e. THQ Nordic and Koch Media.
The announcement also included a comment from THQ Nordic CEO Lars Wingefors, that incidentally teases a “next AAA release” from Saints’ Row developer Volition:
“Koch Media has a long history of profitability despite losses incurred from some less successful game releases. THQ Nordic is convinced that the development studios of Deep Silver as part of THQ Nordic will successfully deliver at least four ongoing AAA game projects including Metro Exodus as well as the next Volition Studio AAA release and the next Dambuster Studio AAA release, together with a number of other game development and publishing titles.”
Koch Media CEO Klemens Kundratitz also commented:
“I strongly believe that THQ Nordic is a great strategic fit with Koch Media. In addition to having long experience within games development and publishing, THQ Nordic has the skills, willingness and capital to deliver growth in the future.”
We also hear that over the past few years Koch Media has invested a large part of its profits into establishing a rich pipeline of games in development that are due to be released over the coming years, which THQ Nordic expects to provide a strong foundation for future profitability.
While Koch Media and Deep Silver will continue to operate as independent entities, there is the possibility of synergies including IPs, assets, and development resources. THQ Nordic also intends to continue with the strategy of acquiring IPs and studios in the future.
Even more interesting is the fact that THQ Nordic has 24 unannounced games in development, while Koch Media has nine, for a total of 33.
The THQ brand was brought back by Nordic Games after the acquisition of the name in 2014, following the THQ’s bankruptcy in late 2012.