17 September 2020

Keywords Studios plc ("Keywords", "the Group")

     Acquisition of Heavy Iron Studios

West Coast US Expansion for Keywords' Game Development Service Line

Keywords Studios, the international technical and creative services provider to the global video games industry, today announces that it has entered into a conditional agreement to acquire the entire issued share capital of Heavy Iron Studios, Inc. ("Heavy Iron"), a provider of specialised game development services, for total consideration of up to US$13.3m. The acquisition will further the Group's strategy to become the 'go to' technical and creative services platform for the global video games industry.

Founded in 1999 and acquired from THQ Inc. in 2009 by Lyle Hall, a 30-year industry veteran, Heavy Iron is based in Los Angeles, California, where its team of 43 developers provides full game development, co-development, live operations and porting services for the video games industry. Renowned as a high-quality studio, Heavy Iron has recently worked on Marvel's Avengers with Crystal Dynamics and the Call of Duty franchise with Activision as well as multiple ports and remasters, including the full series of Disney Infinity games. Primarily focused on high-end console and PC games, Heavy Iron's specialty is technical expertise across multiple proprietary engine technologies, and it has strong development experience across all major platforms.

For the year ended 31 May 2020, Heavy Iron generated unaudited revenues of US$5.4m and adjusted EBITDA of US$1.0m. Under the terms of the acquisition, which is subject to certain closing conditions, Keywords will pay initial consideration of US$4m in cash and  the equivalent of US$0.5m in new ordinary shares to the seller on the first anniversary of the acquisition, which will then be subject to orderly market provisions for a further year. The deferred consideration of up to US$8.8m will be payable to the seller, in a mix of cash and shares, based on performance targets being met by the first and second year anniversaries of the acquisition.

Andrew Day, CEO of Keywords Studios commented:

"We welcome the extremely experienced and talented Heavy Iron team to the Keywords family. The addition of Heavy Iron to the Group further strengthens and scales our Game Development service line. By bringing a new base on the West Coast, it will provide access to many of the world's leading game companies and the local talent pool from where we can expand our activities in the region and build upon our existing presence in Audio and Localisation."

"Now our largest service line, Game Development continues to grow strongly with all our studios hiring.  We look forward to Lyle and his terrific team joining us and supporting Heavy Iron's continued growth from their strong position."

"This marks our third acquisition since our recent placing, and we have a healthy pipeline of acquisition opportunities which we are actively reviewing and advancing."

Lyle Hall, Chief Executive Officer of Heavy Iron, further commented:

"We are thrilled to be joining the Keywords Studios family and look ahead to sustained growth. Keywords' leading position in the video games industry, its breadth of services, and its geographical reach will strengthen our ability to continue providing outstanding service and support to our partners. We also look forward to collaborating with other members of the Group in offering wider capabilities to all our clients."

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About Keywords Studios (www.keywordsstudios.com)

Keywords Studios is an international technical services provider to the global video games industry. Established in 1998, and now with 62 facilities in 21 countries strategically located in Asia, the Americas and Europe, it provides integrated art creation, marketing services, software engineering, testing, localization, audio and customer care services across more than 50 languages and 16 games platforms to a blue-chip client base of over 950 clients across the globe. 

Keywords Studios has a strong market position, providing services to 23 of the top 25 most prominent games companies, including Activision Blizzard, Bandai Namco, Bethesda, Electronic Arts, Konami, Microsoft, Riot Games, Square Enix, Supercell, TakeTwo, Epic Games and Ubisoft. Recent titles worked on include Call of Duty: Modern Warfare, Anthem, Star Wars Jedi: Fallen Order, Assassin's Creed Odyssey, Valorant, League of Legends, Fortnite, Clash Royale and Doom Eternal. Keywords Studios is listed on AIM, the London Stock Exchange regulated market (KWS.L).

About Heavy Iron (www.heavyiron.games)

Founded in August 1999, Heavy Iron Studios is a Los Angeles based video game developer recognized as a leader in creating hit, mass-market titles for consoles, PC, mobile, and AR/VR platforms. Since June 2009, Heavy Iron Studios, Inc. has been a wholly independent and privately held company. Recent titles worked on include Marvel's Avengers, Call of Duty, and The Grand Tour Game. Titles the studio has worked on have sold a combined lifetime total of +200 million units and generated over $2 billion in revenue, across multiple genres and all platforms.