By Gary Symons
TLL Editor in Chief
In a bid to grow its mobile gaming business, SEGA Corporation has agreed to acquire Finnish company Rovio Entertainment.
Rovio is best known for its mobile gaming hit Angry Birds, which has sold billions of copies and also spawned films and a thriving licensing business.
On April 17, SEGA’s board voted to implement a tender offer to acquire Rovio through SEGA’s wholly-owned UK subsidiary SEGA Europe Limited for $706 million Euros, or $770.48 million USD at time of writing.
SEGA SAMMY HOLDINGS, the parent company for SEGA, has now entered into a definitive agreement with Rovio pursuant to which the Tender Offer is made.
The deal would see SEGA buying out the entirety of Rovio’s outstanding shares and options for 9.25 Euros per share, and 1.48 Euros per option.
SEGA says the acquisition is a friendly takeover, as Rovio’s board of directors has agreed to the deal, and shareholders with 49.1 per cent of the company’s shares have also already agreed to the offer. The deal is expected to close in Q2 of 2024, but is contingent on the completion of regulatory reviews.
So, why is SEGA buying out the Angry Birds’ developer?
According to a statement, a major reason is the company’s plan to strengthen its business by converting existing intellectual property into global brands, and to strengthen user engagement by putting out games on multiple platforms. In short, mobile gaming and licensing are expected to be major drivers of future growth at SEGA, and Rovio has a demonstrated history of success in both those arenas.
“Rovio is a global mobile-first, games company that creates, develops and publishes mobile games, which have been downloaded over 5 billion times,” SEGA notes. “Rovio is best known for the global Angry Birds brand, which started as a popular mobile game in 2009, and has since evolved from games to various entertainment, anime, and consumer products through brand licensing.
“SEGA aims to accelerate its growth in the global gaming market and increase its corporate value by generating synergies between SEGA’s existing businesses and Rovio’s strengths, including its global IPs and live-operated mobile game development capabilities.”
SEGA has previously acquired gaming development studios, including The Creative Assembly Ltd. in the UK, and ATLUS from Japan.
SEGA also notes that in the $263 billion global gaming market, mobile is growing faster than the gaming industry as a whole. Mobile gaming is growing by a CAGR of 5.0%, and now represents 56% of overall gaming revenue worldwide, while gaming in general is growing by a CAGR of 3.5%, according to a report from IDG.
“The Company firmly believes that it is imperative to continue investing in its game development and operating capabilities, in order to further strengthen its position in this fast-growing mobile and global gaming market, which therefore led to the decision to acquire Rovio,” SEGA says. “Through the Acquisition, the Company aims to take-in Rovio’s live-operated mobile game development capabilities and expertise in mobile game operation, to accelerate the development of mobile-compatible and multi-platform-supported version of SEGA’s existing game IPs, thereby strengthening and further accelerating global expansion of SEGA’s game portfolio.”
SEGA SAMMY Holdings CEO Haruki Satomi says the deal represents an enormous opportunity for SEGA and for Rovio shareholders.
“I feel blessed to be able to announce such a transaction with Rovio, a company that owns “Angry Birds”, which is loved across the world, and home to many skilled employees that support the company’s industry leading mobile game development and operating capabilities,” he said.
“Historically, as represented by the “Sonic the Hedgehog” series, SEGA has released countless video game titles to various gaming platforms. I am confident that, through combination of both companies’ brands, characters, fanbase, as well as corporate culture and functionality, there will be significant synergies created going forward.”
Rovio’s CEO, Alexandre Pelletier-Normand, says the best is yet to come from both comapnies, thanks to the synergies between SEGA and Rovio.
“Our mission is to ‘Craft Joy’ and we are thrilled at the idea of using our expertise and tools to bring even more joy to our players, enhancing and expanding Rovio’s and SEGA’s vibrant IP,” he said. “Red and Sonic the Hedgehog: two globally recognized and iconic characters made by two remarkably complementary companies, with a worldwide reach that spans mobile, PC/console, and beyond. Combining the strengths of Rovio and SEGA presents an incredibly exciting future.”