TIDMTM17
RNS Number : 9812D
Team17 Group PLC
02 July 2021
2 July 2021
Team17 Group plc
("Team17", the "Group" or the "Company")
US$26.5 million acquisition of StoryToys
Team17 , a global games entertainment label, creative partner
and developer of independent ("indie") premium video games, is
pleased to announce it has entered into an agreement to acquire the
business and assets of StoryToys (via the acquisition of its parent
company TouchPress Inc.) (the "Acquisition").
StoryToys is a world-class developer and publisher of
educational entertainment ("edutainment") apps for children, and
the Acquisition establishes a new highly complementary and fast
growing edutainment vertical for Team17, strengthening the enlarged
Group's position as a leading games entertainment business.
The initial consideration for the Acquisition is US$26.5
million, with a further maximum US$22.5 million payable in cash on
delivery of certain targets by the vendors within three years
following completion of the Acquisition and will be funded from
Team17's existing cash reserves.
Acquisition highlights:
-- Founded in 2011, StoryToys is a multi-award-winning, leading
player in edutainment apps for children under the age of eight and
has produced apps with many leading children's brands, including
The LEGO(R) Group, Disney, Pixar, Penguin, Sesame Workshop, Dick
Bruna, Warner Bros, Hasbro, and Nickelodeon
-- With over 100 million app downloads, StoryToys has been the
recipient of numerous awards for the quality of its products,
including Kidscreen Award Winner 2021, Licensing International
Excellence Awards Winner 2020, KAPi Awards Winner 2020, numerous
Children's Technology Review Editor's Choice Awards, and multiple
Bologna Ragazzi Digital Awards
-- As a multi award-winning brand and a well-known name in the
edutainment industry, StoryToys has built an unrivalled position in
the market
-- The Acquisition will broaden Team17's existing skillset and customer reach
-- The Acquisition is profitable and growing and expected to be immediately earnings accretive
-- The Acquisition brings a talented team to Team17, who will
continue to operate and function as an independent vertical within
the enlarged Group, and maintain the StoryToys brand
-- Supported by Team17, the ambition is to grow StoryToys to be
the global number one children's edutainment brand for ages 8 and
under
Information on StoryToys
Founded in 2011 and based in Ireland, StoryToys is a leading
developer of educational apps, targeting the pre-school market of
children aged two to seven years old. StoryToys apps have been
downloaded over 100 million times across 120 countries, and its
educational entertainment apps are produced in as many as 28
different languages.
StoryToys' mission is to create apps for children that engage
them in well-rounded activities designed to help them learn, play,
and grow. Parents get peace of mind seeing their children
simultaneously learning and having fun.
Companies with leading brands focused on young children and
seeking to develop high quality educational content for the digital
domain work with StoryToys, who undertake the translation of brand
values into engaging and educational interactive products for the
digital domain.
StoryToys generates revenues from its apps through subscription,
in-app purchases, and paid apps. It follows the child's development
journey and migrates users throughout their portfolio of content as
they grow. Whilst there is an obvious natural churn in players as
children outgrow the apps, there is also a constant flow of new
customers primed to replace aged-out users.
The team at StoryToys has significant experience and
relationships with some of the world's leading education, games and
media giants. The entire team will join Team17 as part of the
Acquisition and the enlarged Group will continue to leverage their
knowledge and expertise to drive future growth.
StoryToys has historically demonstrated its ability to drive the
user experience with regular updates to content, new features, and
the introduction of new products. This momentum is due to continue
into H2 2021 and beyond, with a strong pipeline of new product
launches planned for the period, along with ongoing discussions
with new key partners.
Strategic rationale for the Acquisition
The Acquisition of StoryToys is in line with the Group's
existing growth strategy and is expected to bring a number of
benefits to the Group, including:
-- Enables Team17 to enter a new, highly complementary
edutainment vertical, further strengthening Team17's position as a
provider of games entertainment to a broader audience
-- The Group believes demand for educational entertainment apps,
which has accelerated as a result of the COVID-19 pandemic, focused
on the pre-school audience will see significant growth going
forward. According to Technavio, the global educational apps market
forecast to grow by over US$46 billion between 2020 and 2024, with
CAGR of 26%[1]
-- Supported by Team17's strategic partner relationships, combined with consistent growth and commercialisation experience, StoryToys has the potential to build on its existing foundations and accelerate its current growth trajectory
-- The Acquisition will deliver cross collaboration
opportunities between Team17 and StoryToys, such as writers,
artists, musicians, programmers, editors and designers, in addition
to sales and marketing
-- The combination of both Team17 and StoryToys also creates
exciting commercial opportunities with a number of brands of
technology and media partners, including The Walt Disney Company,
The LEGO(R) Group, Penguin Books, Sesame Workshop, Apple, Amazon
and Google
Financial effects of the Acquisition
The Acquisition is expected to be immediately earnings
accretive, generate returns well above the cost of capital and
whilst smaller in scale, deliver margins and cash generation
approaching the levels of Team17.
This statement is not meant or intended to be a profit forecast
and should not be interpreted to mean that the earnings per share
of Team17 following completion of the Acquisition will necessarily
be above or below the historical published earnings per share.
Debbie Bestwick MBE, CEO of Team17, commented:
"I am thrilled to be welcoming StoryToys into the Team17 family
and believe our shared culture and values perfectly align. In
StoryToys, we are acquiring a highly creative and successful team
whose ability to both entertain and educate children is truly best
in class.
"Their track record is without question but the depth of talent
that exists within the business gives us an unrivalled position
within a hugely exciting and high growth edutainment area.
"We look forward to working closely with the whole StoryToys
team and are delighted to be able to not only support their
ambitious growth prospects but to provide a strong and stable
platform to accelerate their development. Team17 prides itself on
its culture and on embracing ambitious management teams - today's
announcement is an example of how we intend to make that a
reality."
Emmet O'Neill, CEO of StoryToys, commented:
" Team17 is the perfect home for StoryToys as we enter into this
incredible new chapter. Our goal is to be the number one provider
of edutainment content for young children. Collaborating with
Team17 will make that a faster and more exciting journey.
"We believe in creating the best possible digital learning
experiences for children. We look forward to the possibilities that
are opened up by collaborating with what we believe to be the best
partner to deliver our ambitions."
Enquiries:
Team17 Group plc via Vigo Consulting
Debbie Bestwick MBE, Chief Executive Officer
Mark Crawford, Chief Financial Officer
GCA Altium (Nominated Adviser) +44 (0)845 505
Adrian Reed / Paul Lines 4343
Berenberg (Broker)
Chris Bowman / Toby Flaux / Marie Moy +44 (0)20 3207
/ Alix Mecklenburg-Solodkoff 7800
Vigo Consulting (Financial Public Relations)
Jeremy Garcia / Fiona Hetherington +44 (0)20 7390
team17@vigoconsulting.com 0233
About Team17 Group plc
Team17 Group plc is a global provider of games entertainment to
a broad audience. It has two main verticals - a games entertainment
label and creative partner for indie developers, and a leading
developer of educational apps, targeting children under the age of
eight.
Games label and creative partner
Team17 is a games entertainment label and creative partner for
independent ("indie") developers, focused on the premium, rather
than free to play market, and creating games for the PC, console,
mobile and tablet gaming markets.
Alongside developing the Company's own games in house ("first
party IP"), Team17 also partners with independent developers across
the globe to add value to their games in all areas of development
and production and in bringing them to market across multiple
platforms for fixed percentage royalties ("third party IP").
Since foundation in 1990, the Company has launched over 100
games, including the iconic Worms, Overcooked! and Escapists
franchises, along with many more including; Yooka-Laylee, Yoku's
Island Express, My Time at Portia, Hell Let Loose, Blasphemous,
Golf With Your Friends, Neon Abyss and Moving Out making Team17 one
of the most prolific developers and diverse partners of games for
the indie market.
StoryToys
Team17's wholly owned subsidiary, StoryToys, is a leading
developer and publisher of educational apps, targeting the
pre-school market of children aged two to seven years old.
StoryToys apps have been downloaded over 100 million times
across 120 countries, and its educational entertainment apps are
produced in 28 different languages. StoryToys' mission is to create
apps for children that engage them in well-rounded activities
designed to help them learn, play, and grow, with partners
including The Walt Disney Company, The LEGO Group, Penguin Books,
Sesame Workshop, Apple, Amazon and Google. www.storytoys.com
Visit www.team17.com for more information
[1]
https://www.businesswire.com/news/home/20201015005543/en/Education-App-Market-Growing-Demand-for-STEM-based-Apps-to-Boost-the-Market-Growth-Technavio
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