Japanese gaming giant Sega has confirmed it is buying Finland’s Rovio in a cash deal worth €706 million ($775 million).
News first emerged in January that Israeli mobile gaming company Playtika had made a €750 million ($810 million) bid for Rovio, though talks fell through last month with no reason given by either company. Rovio did, confirm, however, that it was still in talks with other parties, with rumors surfacing over the weekend that Sonic the Hedgehog creator Sega was in the mix.
Now the deal is official, with Rovio noting that it expects the deal to close in the second quarter of the current fiscal year, so sometime in the next few months – subject to “certain customary closing conditions”.
Sega’s offer represents a 63.1% premium to Rovio’s closing price on January 19, the last trading date before reports of a potential acquisition first appeared, and a 19% premium to Rovio’s closing price on Friday, January 14 April.
The Angry Birds company
Founded in 2003, Rovio has emerged as one of the biggest European technology success stories. While the company had produced dozens of games before the advent of Android and iOS, it was the burgeoning smartphone revolution that catapulted Rovio into mainstream consciousness, with Angry Birds becoming a global hit and franchise spanning everything from toys and cookbooks to movies and a TV. show.
Rovio went public in 2017, hitting the Nasdaq Helsinki to a somewhat lukewarm reception and a valuation of $1 billion. In the intervening years, the company’s shares have largely declined, generally around half of their IPO value. So it may have come as no surprise that Rovio herself had gone shopping with potential suitors.
With Rovio under its wing, Sega says it plans to “accelerate development of its own existing games” and “generate synergies” between Sega and Rovio’s brands. In particular, it seems that Rovio’s experience in so-called “live-service” mobile gaming is what appealed to Sega, which redirects games designed to play more or less indefinitely through regular content updates to keep players interested. In addition, Sega said Rovio’s expertise could help expand Sega’s current and upcoming games into more markets, particularly in Europe and North America.
On the other hand, Sega said it will use its cross-platform expertise to enable Rovio to move beyond mobile gaming, which presumably means into consoles and/or web browsers.
So this deal effectively allows Sega to improve its mobile gaming presence while simultaneously allowing Rovio to move in the other direction.
“Of the fast-growing global gaming market, the mobile gaming market has particularly great potential, and it has been SEGA’s long-term goal to accelerate expansion in this area,” said Haruki Satomi, president and group CEO of Sega’s parent company Sega Sammy. Holdings, in a press release. “I am confident that the combination of both companies’ brands, characters, fan base, as well as corporate culture and functionality will create significant synergies in the future.”