Team17 Group plc - €100m acquisition of astragon

Team17, a global games label, creative partner and developer of independent ("indie") premium video games and publisher, creative partner and developer of educational entertainment ("edutainment") apps for children, is pleased to announce that it has entered into a definitive agreement to acquire astragon Entertainment GmbH ("astragon"), a well-known developer, publisher and distributor of sophisticated ‘working’ simulation games based in Germany, for a maximum cash consideration of €100 million (£83 million[1]) (the “Acquisition”).

The initial cash consideration payable is €75 million (£63 million1), with a further consideration of up to €25 million (£20 million1) payable in cash on the delivery of EBITDA performance targets for the financial years ending December 2021 and 2022. In addition, a Management Incentive Plan of up to €7.5 million (£6.25 million1) has been established for the existing management and employees of astragon linked to the delivery of EBITDA performance targets.

The Acquisition is not subject to regulatory approval and is expected to complete mid-January 2022. The vendors of astragon are André Franzmann, Dirk Walner and FFF - Beteiligungs GmbH. 

The Acquisition will be funded from the proceeds of a proposed placing of new ordinary shares in the Company to raise approximately £80 million (before expenses) (the "Placing"). The Placing is being conducted through an accelerated book building process which will be launched immediately following the release of a separate announcement relating to the Placing. Joh. Berenberg, Gossler & Co. KG ("Berenberg") is acting as sole global co-ordinator and sole bookrunner (the "Sole Global Co-ordinator", the "Sole Bookrunner", or the "Bank") in connection with the Placing.

Acquisition rationale & highlights

The Acquisition of astragon is in line with the Group’s existing growth strategy and, in the opinion of the directors of the Company ("Directors"), is expected to bring a number of benefits to the Group, including:

Enables Team17 to enter a new and complementary simulation game category, further strengthening Team17’s position as a provider of games entertainment to a broader audience.

Brings a strong back catalogue of evergreen owned franchises and IP with more than 20 games developed over the last 10 years and a solid pipeline of products in development.

Supported by Team17’s strategic partnerships, combined with consistent growth and commercialisation experience, astragon has the potential to build on its existing foundations and accelerate its current growth trajectory to achieve its ambition to become the global number one simulation portfolio brand for gaming.

The Acquisition accelerates Team17’s entry into content offering to consumers in the high-quality simulation space which the Group believes the demand for this kind of non-violent and cooperative entertainment games has accelerated as a result of the COVID-19 pandemic.

The Acquisition brings a specialist talented team to Team17, who will continue to operate and function as an independent vertical within the enlarged Group whilst also delivering cross collaboration opportunities given the core focus on creating and publishing games within their respective genre/fields.

The combination of both Team17 and astragon creates exciting commercial opportunities with a number of brands from other industries and media partners.

astragon is profitable and has demonstrated consistent profit growth of 45% EBITDA CAGR from 2017A – 2020A driven by strong organic revenue growth of 18% CAGR from 2017A – 2020A, which was generated from diversified revenue streams from its expertise in development, publishing and licensing. Audited results show astragon generated c. €26 million of revenue and €5.7 million of EBITDA for the year ended 31 December 2020 and had audited net assets of approximately €13.8 million as at 31 December 2020.

The Acquisition is expected to generate mid to high single digit accretion to EPS, based on the proposed funding structure.

Information on astragon

Founded in 1998 and headquartered in Duesseldorf, Germany, astragon is a leading developer, publisher and distributor of sophisticated ‘working’ simulation games, targeting a broad audience from young enthusiasts to technical experts and casual relaxed gamers.

astragon’s well known IPs such as Firefighting Simulator, Police Simulator, Bus Simulator and Construction Simulator focus on non-violent cooperative gameplay with very detailed, technical, and realistic environments across PC, Console and Mobile gameplay, for millions of enthusiastic customers.

Companies with leading brands from other industries work closely with astragon, which undertakes the translation of brand values into engaging simulation game products for the digital domain.

The team at astragon has significant experience and relationships with some of the world’s leading vehicle brand manufacturers, games, and media companies. 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.

astragon has historically demonstrated its ability to broaden their audience with regular updates and content, new features, and the introduction of new products and IPs. This momentum is due to continue into 2022 and beyond, with a solid pipeline of new product launches planned along with ongoing discussions with new key partners.

Debbie Bestwick MBE, CEO of Team17, commented:

“We are delighted to welcome the astragon team into Team17, and believe we are joining forces with one of the leading experts in the simulation games space. They have decades of game creation and publishing experience, have built an outstanding and highly devoted community and have developed an outstanding portfolio of owned IP across this genre.“

“At Team17, we have always strived to build, develop and publish great content for the widest audience possible.  With the addition of StoryToys and the expansion of our Games Label, which includes the recently acquired USA based ‘The Label’ and now astragon, we have significantly expanded Team17’s appeal to the widest ever cross section of gamers, spanning multiple genres and age groups.”

“We look forward to working closely with astragon’s joint CEOs Julia and Tim and their whole team who share our ambitions to grow their own IP titles on the path to developing a leading global simulation portfolio brand as part of the Team17 family.”

Julia Pfiffer and Tim Schmitz, CEOs of astragon, commented:

“Team17 is the perfect home for astragon as we enter into this exciting new chapter. From the first day we felt that Team17 shares the same vision for our games and understands our target group. Our goal is to become the number one brand in the field of ‘working’ simulation games. Collaborating with Team17 will enable and help astragon to evolve and focus on this strategy. We look forward to the possibilities that are opened up by working with what we believe to be a great partner to deliver our ambitions.”