EQT in discussions to buy UK-listed video game group for £2.2bn


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European private equity group EQT is in advanced discussions to buy video game services company Keywords Studios for £2.2bn, in the latest potential takeover of a London-listed company.

EQT is negotiating over a cash offer of £25.5 per share. It has already made four unsolicited proposals for the business, all of which were rejected by its board, according to a statement from Keywords.

The EQT offer is a more than 70 per cent premium on the stock’s value at the close of trading on Friday.

The latest proposal is a “significant increase” from the initial bid and the board of Keywords Studios “would be minded to recommend” it to shareholders if a firm bid is made, the company said.

Dublin-based Keywords Studios’s shares rose 5 per cent in Friday trading to close at £14.70 a share.

The company’s board said that it remains confident about its growth plans including expanding through acquisitions, and that EQT supported its strategy.

Keywords Studios, which is listed on London’s junior Aim market, was established in 1998 and has more than 13,000 employees in 26 countries. It provides services from game art to marketing and testing.

Its clients include Activision Blizzard, Electronic Arts and Tencent, and it has worked on games such as Fortnite and League of Legends.

It floated in 2013 at a market valuation of less than £50mn.

More recently, its share price has more than halved from a peak in September 2021, as investors have worried about the potential for some of its services, such as translation, to be supplanted by artificial intelligence.

The company reported record revenues of €780mn in 2023 — up 13 per cent year-on-year — while its pre-tax profit fell 49 per cent to €35mn. It also provides services to film and television production and blamed the US writers’ strike for €20mn of lost revenues in the second half of last year.

Sweden’s EQT is among the biggest private investment firms and has previously bought UK-listed firms such as veterinary pharmaceuticals company Dechra. The group has ​​€242​‌bn of assets under management.

The discussions between EQT and Keywords come as takeover interest in UK-listed companies has reached its highest level since 2018, driven by depressed share prices that are attracting foreign investors.

In April, US private equity firm Thoma Bravo agreed to buy UK-listed cyber security company Darktrace in a £4.3bn deal.

Under UK takeover rules, EQT has until June 15 to either make a firm offer or walk away.


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