MTG, which has a $1.1 billion market cap, will pay $275 million upfront for Hutch, whose games include F1 Manager, Top Drives and Rebel Racing, and expects to pay another $100 million in earn-out payments based on Hutch's financial performance in 2021-2024.

"The acquisition of Hutch is in line with MTG's strategy to build up a portfolio of high-quality gaming companies and marks the beginning of a new journey with the ambition for further organic and acquisitive growth for MTG," the company said in a statement late on Tuesday.

MTG Chief Executive Maria Redin said competition in the gaming sector had increased in the last six to nine months.

"What's really important for us is to continue to focus on the type of companies we want to acquire," she told a telephone conference.

Arnd Benninghoff, Executive Vice President of Gaming & Esport, said MTG had a strong M&A pipeline, with a shortlist of around 15 companies and was continuously screening for new opportunities.

The upfront payment will be financed through MTG's existing cash and a 1.8 billion crown bridge loan facility. MTG said it was evaluating a new share issue to refinance the facility.

Hutch had $56.3 million in sales in the first nine months of 2020, growing 158% year-on-year, and an operating profit (EBIT) of $13.3 million. It had an average of 5.4 million monthly active users in the period.

MTG, whose shares rose 9.7% at 1012 GMT and are up 33% year-to-date, said the deal was expected to be completed in December.

The company said on Monday it had established a new holding company for its gaming business, MTG Gaming, which would hold future acquisitions - such as Hutch - and all its shares in gaming firms InnoGames and Kongregate.

($1 = 8.4366 Swedish crowns)

(Reporting by Johannes Hellstrom and Helena Soderpalm; editing by Niklas Pollard and Raju Gopalakrishnan)