London-listed Keywords Studios receives private equity bid at 73 per cent premium

  • May 19, 2024

London-listed Keywords Studios receives private equity bid at 73 per cent premium

London-listed Keywords Studios receives private equity bid at 73 per cent premium
Brooks Macdonald’s stock price dropped 4.5 per cent upon the news, before recovering throughout the day.

Video game services company Keywords Studios has said it would be “minded” to accept a £2.2bn takeover bid from Swedish private equity giant EQT Partners if it makes a firm offer.

EQT, one of the world’s largest private equity firms, is currently in advanced talks with Dublin-based Keywords over a potential cash offer of £25.50 per share.

AIM-listed Keywords said in a statement that it had previously received four unsolicited proposals from EQT in recent months, all of which its board rejected.

However, the company said EQT’s latest bid was a “significant increase” from its initial proposal and that the board “would be minded to recommend” a firm offer to shareholders.

The latest proposal represents a premium of around 73 per cent to Keywords’ stock price at the close on Friday.

EQT has until 5pm on 15 June to either make a firm offer for Keywords or walk away under UK takeover rules.

Dublin-based Keywords, which provides outsourcing services to the video games and film industries, has seen its shares weighed down in recent times by fears over artificial intelligence’s threat to the sector. The stock closed at £14.70 on Friday – 55 per cent below its peak price in September 2021.

The firm said EQT supported its growth strategy, which includes expanding through acquisitions. Keywords, founded in 1998, employs more than 13,000 staff across 26 countries.

EQT has €242​‌bn (£208bn) of assets under management and last June agreed to buy London-listed animal drugmaker Dechra Pharmaceuticals for £4.5bn .

Its proposal to acquire Keywords underscores what has been a surge of takeover interest in London-listed firms this year as mostly overseas buyers look to pounce on relatively low stock market valuations.

News of EQT’s discussions comes shortly after US private equity giant Thoma Bravo last month struck a $5.3bn (£4.3bn) deal to buy cybersecurity company Darktrace in a move that sparked fears over the London Stock Exchange’s reputation as a trading venue for tech firms.

Keywords, which has a market capitalisation of £1.16bn, has become the 10th London-listed firm worth more than £1bn that is currently engaged in takeover discussions, compared to just one in the same period last year.