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Keywords Studios acquires Synthesis Group in largest deal to date

The combination with Synthesis Group creates an ‘undisputed leadership’ position in the market for localisation and voice-over recording for video games, Keywords highlighted.

It is a major milestone in the consolidation of the video game services sector.

Acquisitive Keywords Studios Plc (LON:KWS) has unveiled its largest deal to date with the purchase of the Synthesis Group of companies, which positions the consolidated group as the market leader for localisation, audio and localisation testing services.

The AIM quoted outsourcing group for the video games industry will pay up to €18mln for Synthesis, and initially €10.2mln is paid in cash.

Keywords said it expects the deal to be immediately earnings enhancing. Synthesis had pro forma revenues of €16.9mln in 2015, and a reported €2mln profit before tax (in the same year Keywords generated €58mln and €8mln respectively).

Andrew Day, Keywords chief executive, described it as an important milestone in the group’s consolidation of a sector which remains highly fragmented.

“Having been long time admirers of Synthesis’ deep relationships with its clients, such as Activision, Bethesda, Disney, Ubisoft and Sony, we are delighted to be joined by such a dedicated and talented team of producers, project managers, audio directors, engineers, translators and testers.

“Their culture of client and project focus and their drive for the best quality and on time deliveries are a strong fit with the culture of Keywords and we are confident that the integration of the Synthesis Group within Keywords will lead to an even stronger services business shaped around the very best talent in the industry.”

Synthesis has a 20 year track record providing services to major game development studios, Keywords highlighted. It has worked on many of the top games franchises – such as Call of Duty, Grand Theft Auto, World of Warcraft, Destiny, Borderlands, Need for Speed, Assassins Creed, Battlefront, and Fallout.

In conjunction with the core Keywords business and the Binari Sonori business acquired in May 2014 the AIM quoted group will now have an ‘undisputed leadership’ position in the market for localisation and voice-over recording for video games world-wide.

Keywords takes control of Synthesis’ subsidiaries based in Switzerland, Milan, Hamburg as well as operations in France, Spain, Brazil, Mexico, US, Taiwan, Singapore, Korea and Japan.

The operations in Brazil, Mexico, US, Spain, Tokyo and Singapore will be absorbed into Keywords existing studios in those countries, while the deal gives it new presence in Germany (Hamburg), France (Paris) and Taiwan (Taipei).

Of the €18mln deal consideration, €1mln is contingent upon Synthesis generating at least €15mln in revenue in the twelve months post acquisition.

Some €10.2mln has been paid in cash, and the remainder of the consideration is satisfied by the issue of 2.37mln new Keywords shares - which will be issued in two equal tranches on the first and second anniversary of the deal.

Keywords is acquiring the Synthesis business from company founders Max and Luca Reynaud, who along with other key members of the management group will remain in the business.

“We are looking forward to working with Max and Luca to continue the growth of Synthesis with the benefit of the scale, broader service offering and enlarged client base of the combined group and to exploiting the best of Synthesis and Keywords for the benefit of all our clients, employees and wider collaborators,” Day added.

Max Reynaud, Synthesis founder and chief executive, said: “We are delighted to be joining the Keywords group. 

“In Keywords, we believe we have a unique opportunity to join with a likeminded team to develop our business and our people and to expand upon the services and delivery centres we can offer to our clients.”       

He added: “We firmly believe that the consolidation of the services market is an essential component in advancing the video games industry and one which will enable our multi-billion dollar, global clients to work with a leading provider that can serve their needs across all the major markets, game platforms and in support of their constant innovation in interactive content.

“We at Synthesis have shared the vision of Keywords for some time and we are pleased to be able participate in the execution of Keywords’ strategy to become the ‘go to’ provider of technical services to the video games industry.”

Quick facts: Keywords Studios PLC

Price: 2455.6 GBX

Market: AIM
Market Cap: £1.83 billion

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