Recently, MTG made a significant splash in the mobile games industry with the acquisition of Hutch Games, the London based organization known mostly for its mobile racing games such as Rebel Racing, F1 Manager, and Top Drives. The agreement is for Hutch to be sold for a total of US$375 million, with US$275 million up front, and additional earn-out payments that are based on Hutch’s financial performance, valued at US$100 million. An earn-out payment is an agreement of future compensation based on certain terms and conditions, paid out to the business after it is sold.
Too much to read the whole press release?
Consider reading the quick summary on what Hutch is, and why we have acquired them as our first investment through our recently announced new GamingCo:https://t.co/eVtd4yJfHX #gaming #hutchgaming #hutch #mtg #mtggaming
— Modern Times Group (MTG) (@MTGAB) December 8, 2020
The acquisition is the first under MTG’s new holding company GamingCo, but joins the organizations already strong combination of gaming entities such as ESL Gaming, Dreamhack, InnoGames, and Kongregate. This deal further diversifies MTG’s gaming assets, as they now feature properties that specialize in events and tournaments, online communities, gaming web platforms, and game publishing. Clearly with a strategic plan in place, it seems as if MTG (OMXSTO:MTG_B) is going to continue to leverage their buying power and ride the continued rise of video games.
In announcing the deal, MTG brings to light some of the highlights of the transaction:
- The top three titles are F1® Manager, Top Drives, and Rebel Racing, all in early growth phase with large future growth potential. Additionally, Hutch has a promising pipeline of new titles planned for launch in 2021 and 2022
- Hutch has a very strong management team and is made up by a staff of 100+ team members, of whom 70 are developers
- Hutch generated approximately USD 56.3 million in revenues, USD 14.0 million in EBITDA and USD 13.3 million in EBIT, during the first nine months of 2020
- Highly attractive financial profile with a year-over-year sales growth of 158% and improving margins
In the same announcement, MTG President & CEO Maria Redin, and Shaun Rutland Co-founder & CEO of Hutch had this to say respectively:
“Hutch is a true front-runner, responsible for some of the most successful titles in the fast-growing mobile racing category and spearheaded by an exceptionally strong and highly-experienced team. We are thrilled to welcome Hutch to MTG, both as a stellar company in its own right, and as the first investment made by our new gaming holding company.”
“We are excited to join MTG – in them, we have found a home that believes in our values, supports us in our mission and can help take our company and our games to the next level. When we founded Hutch, we wanted to create a world-class working environment and an empowered team dedicated to growing the racing genre on mobile. We made every member of the team a shareholder to recognize the value of their efforts, so this is an important day for all of us.”
Trading on NASDAQ OMX Stockholm, their stock price is currently trading at around 150 SEK which equates to just under US$18 per share. MTG has had a strong 2020 in which their stock has recently reached said mark, increasing from under 100 SEK back in January. With continued growth, it looks like Modern Times Group is ready to become a major organization in the gaming industry.