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Keywords Studios plc Acquires GameSim Inc.


Posted: 17th May 2017 08:27

Keywords Studios, the international technical services provider to the global video games industry, today announces the acquisition of GameSim Inc., a specialist  in outsourced engineering services and technology platforms for the video games industry and other virtual simulation applications, from its Founder and President, Andrew Tosh.

The acquisition of GameSim marks Keywords Studio's first step into the market for software engineering services. It is in line with its strategy of growing both organically and by acquisition to extend the Group's client base, market penetration or service lines, where the Group can leverage its existing expertise, multi-service platform, scale and global reach to generate synergies.

Based in Orlando, Florida, GameSim employs over 30 software engineers and artists and has a range of cutting edge, proprietary technology platforms which are integrated with client processes to develop video games and visually simulate environments for military and urban planning applications.  GameSim's founder Andrew Tosh is a software engineer who worked in the military simulation industry and then at Electronic Arts before starting GameSim in 2008. GameSim engineers and artists work on long running co-development projects as well as short turnaround engagements for their clients, which include EA, Zynga, and United States Department of Defense projects. GameSim achieved $4.1m in revenue for the year ended 31 December 2016. Andrew Tosh, along with the rest of the GameSim team, will remain in the Group.

Under the terms of the acquisition, which is expected to be earnings enhancing in the first year, Keywords Studios is paying the Seller a total of $4.76m for 100% of GameSim. This is being satisfied by $3.2m in cash, funded from the Group's existing resources, with the remainder satisfied by the issue of 151,725 new ordinary shares in Keywords, which will be subject to a one-year lock in period.

Application has been made to the London Stock Exchange for the admission of 151,725 new ordinary shares to trading on AIM. Admission of the new shares is expected to take place at 8.00am on 22 May 2017. The Company's total issued share capital following admission will consist of 55,787,994 ordinary shares of one pence each with one voting right per share. The above figure of 55,787,994 may be used by shareholders as the denominator for the calculations by which they can determine if they are required to notify their interest in, or a change to their interest in, the Company following admission.

Keywords intends to grow further in the video games software engineering services market through acquisition and organic growth to build a seventh service line of scale, following in the path of its fast-growing art services business.

Andrew Day, Chief Executive of Keywords Studios, commented:

"The acquisition of GameSim is an entry point into outsourced software engineering services and is highly complementary to our existing essential services to game developers and publishers around the world. Our intention is to use this as a platform from which to build a market leading engineering capability and we continue to review a number of compelling acquisition opportunities in this specialist and large, yet fragmented market.

"Providing the group with an additional avenue to growth, outsourced software engineering services are used by game developers in several ways such as: extensions to their own in-house engineering teams; to undertake projects to port developed games from one hardware platform to another; "hit squads" to solve complex problems; or for complete game development.  These engineering services combine particularly strongly with our art creation services but are also synergistic with our localisation and testing businesses in which game development skills can be deployed to increase automation and to integrate our services more directly with client side systems and processes. The market for game software development is growing with the increase in-game content, as games on consoles, social media, PCs, tablets and smart phones get bigger and richer in their definition and as games continue to move from a product to a services model requiring continuous content development, and as games developers and publishers outsource a greater proportion of this activity.

"We look forward to welcoming GameSim's highly talented teams to the fast growing Keywords group and to continuing to build upon its strong brand, leveraging Keywords' unparalleled geographic footprint, client relationships and financial strength to support its growth."

Andrew Tosh, Founder and President of GameSim, commented:

"It is exciting for GameSim to enter a new chapter as Keywords' first engineering studio. GameSim will take advantage of synergies with other Keywords studios to better service our customers in the video gaming, military simulation & training, and geospatial visualisation industries."


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