Zynga Inc enters agreement to acquire Peak Games
Draper Esprit plc
("Draper Esprit", "the Group" or the "Company")
Z ynga Inc ("Zynga") enters into agreement to acquire 100% of Peak Games for $1.8 billion
Draper Esprit (LSE: GROW, Euronext Growth: GRW), a leading venture capital firm investing in and developing high growth digital technology businesses, notes the announcement released by Zynga to enter into an agreement to acquire Istanbul-based mobile games developer Peak Games for $1.8 billion, comprised of approx. $900 million in cash and approx. $900 million of Zynga common stock. The acquisition is expected to close in Q3 2020.
In January 2019, Draper Esprit announced that it had furthered its strategic partnership with Earlybird Digital West ("Earlybird"), a German Venture Capital firm with a focus on early stage investments in Europe, by acquiring a 27% interest in Earlybird's EB IV fund for approx. €63 million (approx. £55 million).
As a result of this investment in the EB IV fund, Draper Esprit acquired underlying holdings in nine high growth technology companies including Istanbul-headquartered games developer Peak Games.
The agreement for Zynga to acquire Peak Games will, once closed, indicate a fair value holding for Draper Esprit in Peak of approx. £80 million (depending upon the Zynga share price at the time), which is a £12 million (approx. 10p NAV per share) uplift to the fair value referenced in the recent trading statement.
Peak Games has successfully built a global user base for its community-based, multiplayer board and card games as well as its innovative casual puzzle games. Over 275 million users around the world have now installed at least one of the company's products. Its most popular games, Toon Blast and Toy Blast, have more than 12 million average mobile DAUs (Daily Active Users).
The proposed sale is the first realisation of this financial year to 31 March 2021, and follows total exits realised in the 12 months to 31 March 2020 of £40 million (2019: £16 million).
As announced on 28 May 2020, prior to the proposed sale of Peak Games, the Group already had available cash resources of £39 million at the plc (including £5 million undrawn debt) and £50 million within our EIS/VCT funds.
Commenting on the transaction, Martin Davis, Draper Esprit Chief Executive Officer, said:
"The sale of Peak Games to Zynga represents a significant return on our original investment in the EB IV fund and underlines the benefits of delivering both primary and secondary transactions as part of our broader strategy. Deals of this nature typically encompass a shorter timescale from investment to realisation and allow us to invest at attractive entry points. This, combined with our evergreen balance sheet, means that the realised capital can be redeployed to ensure that Draper Esprit is able to continue to invest through the cycle.
"The fact that this transaction has been executed against the current backdrop of wider economic uncertainty is testament to the attractiveness of Peak's proposition, its strong recent trading performance following increased demand for its games and the immense potential the business has to build on its existing position as one of Europe's most attractive, high growth video games developers.
Adding more detail on Peak and Earlybird, Simon Cook, Draper Esprit Founding Partner, said:
"Peak's acquisition represents an exciting next chapter for Sidar and the incredible team at Peak Games and is testimony to what they have achieved on a global scale with a small team from Istanbul in a just few short years. True global entrepreneurs can be found everywhere today and we are excited to be able to help them achieve their ambitions. Our partners at Earlybird deserve all the recognition for leading the series A and B rounds and in spotting the potential for the Peak team almost 10 years ago. Our partnership with Earlybird continues to generate significant returns, enabling us to reinvest in the best European technology companies on behalf of our shareholders.
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Draper Esprit plc
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