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Supercell deal helps push games M&A over $5 billion

Supercell deal helps push games M&A over $5 billion

Mon 21 Oct 2013 8:45am GMT / 4:45am EDT / 1:45am PDT
BusinessFinancial

2013 investment hits record figure driven by Chinese, Japanese and South Korean buyers

The market for video game mergers and acquisitions has passed $5 billion for the first time in 2013, helped by recent deals including Soft Bank and GungHo's 51% stake in Supercell.

Also pushing the numbers up are Ourpalm's recent acquisitions of China's Playcrab and Shanggames. If you take into account the management led portion of the Activision Blizzard buyback from Vivendi, then the total number could be higher.

M&A activity is being driven by mobile, Chinese, Japanese and South Korean buyers, said Tim Merel of investment bank Digi-Capital.

"Games M&A to date this year has just topped $5 billion for the first time, with most of Q4 2013 left to run. When we anticipated a record for games M&A in 2013 two weeks ago in our Q3 2013 Global Games Investment Review, we were not expecting that record within two weeks.

Supercell pushed it up to $4.8 billion, but the recently reported Ourpalm acquisitions are what took games M&A to $5.2 billion so far this year. As was the case in 2012, this M&A was dominated by mobile, and Chinese, Japanese and South Korean buyers.

The latest review from Digi-Capital can be read here, with Tim Merel due to speak on investment at the GamesBeat conference next week.

8 Comments

Jim Webb
Executive Editor/Community Director

2,246 2,233 1.0
M&A activity is being driven by mobile, Chinese, Japanese and South Korean buyers, said Tim Merel of investment bank Digi-Capital.
Yet half of that $5 billion figure came from the Vivendi sales of Activision. You take that away and M&A figures drop significantly year on year.

Posted:10 months ago

#1

Tim Merel
Managing Director

5 0 0.0
@Jim: The Activision Blizzard deal is not included in the $5.2B figure, so unfortunately your statement is not correct. If it is helpful, you could see all the transactions making up the $5.2B figure in the Review. You could also see the year-on-year growth to record M&A for the last two years on a transaction by transaction basis.

However if you wish to consider the non-buyback portion of the $8.2B Activision Blizzard deal, where management, Tencent, Leonard Green & Partners, Davis Advisors and Fidelity Management & Research Co. paid $2.34 billion as part of the deal (see http://www.bloomberg.com/news/2013-07-26/activision-management-to-buy-vivendi-stake-for-8-17-billion.html) on top of the $5.2B figure, then you could have a higher number.

Posted:10 months ago

#2

Jim Webb
Executive Editor/Community Director

2,246 2,233 1.0
Interesting. If that deal wasn't part of the $5.2 billion figure, I wonder why it was mentioned in the article.

I was hoping to take a look at the list from the Digi-Capital review but the link posted in the article above leads to a 404-Article Not Found page.
http://www.digi-capital.com/news/2013/10/high-growth-mobile-and-asia-drove-g%20ames-ma-to-record-3-3b-to-q3-2013/

Posted:10 months ago

#3
The link has been updated now, so should work fine

Posted:10 months ago

#4

Nicholas Pantazis
Senior Editor

1,017 1,463 1.4
@ Jim Because most of that deal was a buyback, and thus not a merger or acquisition. The part that was, as Tim explained above, would be about $2.3 billion. It could be argued that that should be included.

Nevertheless, your point about the difference in investment still stands. The value of Activision Blizzard alone is considerably higher than all mobile investments during the entire year.

Posted:10 months ago

#5

Jim Webb
Executive Editor/Community Director

2,246 2,233 1.0
Thanks for the updated link. I'll have to download the full report later today.

I was indeed only referring to the $2.3 billion portion of the Activision/Vivendi deal which is why I said it amounts to about half of that $5 billion figure. However, Tim states that was not included in the actual $5.2 billion M&A figure. But this is confusing in the article as it states that, "Also pushing the numbers up are the Activision Blizzard buyback from Vivendi, and Ourpalm's acquisitions...." It is later noted that it was Ourpalm's acquisitions, "are what took games M&A to $5.2 billion so far this year."

So why was the Activision/Vivendi deal referenced in the article and/or why was the acquisition portion not included in the 2013 review?

Posted:10 months ago

#6

Tim Merel
Managing Director

5 0 0.0
@Nicholas: The global figure for mobile games M&A to date is ~$3.5B, so higher than the $2.3B portion of the Activision Blizzard deal not included. You could argue that this additional figure from the Activision Blizzard deal could be added to the total, which we intend to consider when putting together year end figures for the 2014 Review.

@Jim: You will see that Matt has updated his article above our quote to clarify.

Edited 2 times. Last edit by Tim Merel on 21st October 2013 3:10pm

Posted:10 months ago

#7

Jim Webb
Executive Editor/Community Director

2,246 2,233 1.0
The update does eliminate the confusion. Good work all around.

Posted:10 months ago

#8

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