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Playtika Offers $810 Million for Angry Birds Maker Rovio

(Bloomberg) -- Playtika Holding Corp. offered to buy Rovio Entertainment Oyj, the maker of the Angry Birds mobile games, in a deal valuing the Finnish company at about €750 million ($810 million).

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Playtika, a developer of free-to-play mobile games such as Bingo Blitz, said it bid €9.05 a share in cash for the Espoo, Finland-based company. While no previous offer had been published, Herzliya, Israel-based Playtika said it proposed on Nov. 16 to buy Rovio for €8.50 a share.

Rovio shares rose 34% to €7.60 at 10:05 a.m. in Helsinki. The nonbinding offer was 60% higher than Rovio’s market value at the close of trading Thursday and isn’t subject to any financing conditions. No agreement exists between the companies, Playtika said in a statement. Playtika’s shares fell as much as 6.4% in New York after the announcement, before paring most of the decline.

Rovio said the proposal had not been previously seen by the board. The company is not in any talks with Playtika, it said, adding that it plans to assess the proposal before determining how to proceed.

“We firmly believe the combination of Rovio’s renowned IP and scale of its user base, together with our best-in-class monetization and game operations capabilities, will create tremendous value for our shareholders,” Playtika Chief Executive Officer Robert Antokol said in the statement.

Rovio’s famous Angry Birds franchise, first released in app stores in 2009, is the cornerstone of the Finnish company’s operations, generating more than 80% of its gross bookings. It was the first mobile game to reach 1 billion downloads, and Rovio went public in 2017 on the back of its success.

The company’s first months on the stock exchange were characterized by dramatic slumps after its financial disclosures disappointed shareholders. While the stock has gained back some of those early losses, Rovio traded about 50% below its initial public offering price before the offer.

Rovio’s reliance on the Angry Birds brand has worried investors, and the company has sought to expand to other brands and types of games. It has 10 new games in development and has acquired smaller rivals and games studios to grow in hyper-casual and puzzle games.

The key to the deal’s logic is how Playtika plans to accelerate growth and profitability at Rovio, Morgan Stanley analysts led by Matthew Cost said in a note. While the Israeli company has “consistently accelerated growth for its acquired casual properties,” most of its targets have been earlier stage businesses than Rovio, they said.

The offer fails to fully value the Angry Birds IP and there’s potential for a bidding war given mobile publishers’ “rush to gain scale and IP brands,” according to Berenberg analysts Edward James and Benjamin May, who called the franchise one of the strongest brands in mobile games.

The proposal from Playtika is subject to a number of preconditions, including due diligence, a “unanimous and unqualified recommendation” from Rovio’s board, and the negotiation and entry into a combination agreement between Rovio and Playtika, the Finnish company said in a statement.

“There can be no assurance that the indicative proposal will result in any cash tender offer or any other transaction,” Rovio said.

--With assistance from James Cone.

(Updates with share price, analyst comments)

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