DGAP-News: Media and Games Invest plc / Key word(s): Takeover/Capital Increase 
Media and Games Invest signs agreement to acquire the award-winning US game developer KingsIsle adding about 60% Group 
EBITDA. To enable the transaction a EUR 25 million capital increase was committed by Oaktree Capital, holding about 9% 
of the MGI shares 
2021-01-18 / 07:49 
The issuer is solely responsible for the content of this announcement. 
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Media and Games Invest signs agreement to acquire the award-winning US game developer KingsIsle adding about 60% Group 
EBITDA. To enable the transaction a EUR 25 million capital increase was committed by Oaktree Capital, holding about 9% 
of the MGI shares 
 
  . The transaction is transformative for MGI as it will materially increase the size and profitability of MGI Group, 
    adding about 60% Group EBITDA on a pro forma basis (YTD Q3 2020) 
 
  . KingsIsle's Revenue Guidance for 2021 is USD 32 million with an expected adjusted EBITDA of USD 21 million which 
    represents a strong EBITDA Margin of 68% 
 
  . The fixed purchase price is USD 126 million plus up to USD 84 million in earn-outs which represents an EV/EBITDA 
    multiple of 6.0x for the fixed component 
 
  . Oaktree Capital becomes an about 9% minority anchor investor in MGI, with an investment horizon of 3 to 5 years, 
    participating in the transaction through a EUR 25 million capital increase 
 
  . The KingsIsle transaction is a further step of MGI's buy-and-build strategy which is now also gearing towards 
    larger and EBITDA-positive targets 
 
Media and Games Invest ("MGI" or the "Company", ISIN: MT0000580101; Ticker M8G; Nasdaq First North Premier Growth 
Market and Scale Segment Frankfurt Stock Exchange), entered into an agreement with the shareholders of KingsIsle 
Entertainment Inc. ("KingsIsle") to acquire 100 percent of the shares of KingsIsle (the "Transaction"). KingsIsle, 
based in Austin, Texas, is a leading game developer and publisher. The fully owned Massive-Multiplayer-Games Wizard101 
and Pirate101 are having very loyal communities and as such also very sustainable revenues. 
The parties have agreed to a fixed purchase price of USD 126 million on a cash-and-debt-free basis (the 
"Consideration"), plus up to USD 84 million that may be paid to the sellers as earn-out payments (the "Earn-out 
Payment"), depending on 2021 revenues. All consideration shall be paid in cash. Closing of the Transaction is expected 
before the end of January 2021. 
As part of the Transaction, MGI has resolved on a directed share issue of 11,676,241 new ordinary MGI shares at a price 
of EUR 2.14 which corresponds to a small discount of 4% on the average closing share price on Xetra during the last 
twenty trading days. The share issue will be signed by funds advised by Oaktree Capital Management and will generate 
proceeds of EUR 25 million. 
This further acquisition of MGI Group is based on its buy-and-build strategy, which has performed well over 30 
transactions and the subsequent value-increasing improvements of the acquired assets in the last six years. KingsIsle 
introduces its two strong games Wizard101 and Pirate101 to MGI's portfolio of MMO games which both will benefit from 
the entire value-creation-chain at MGI. With its focus on sustainable long term revenue generating games MGI group has 
shown an average growth rate of more than 40% YoY within the last 6 years, whereas speed of growth is increasing. MGI 
focuses next to organic growth also on synergies between its acquisitions and is also via buy and build building a 
strong media unit to have an USP in user acquisition. Further gaming as well as media acquisitions are lined up as well 
as several game launches and larger game updates for existing titles. 
 
TRANSACTION OVERVIEW 
 
Pro Forma Financials Jan - Sep 2020 (unaudited) 
mEUR               MGI Group (IFRS) KingsIsle (US Gaap)^1  Combined 
                                                           Pro Forma^2 
Revenue            92               18                     109 
adj. EBITDA        19               12                     31 
adj. EBITDA Margin 21%              66%                    28%

[Note (1): Carve out of mobile business which is not related to Wizard101 and Pirate101 and split off as part of the Transaction and adjusted to pre Covid MMO revenue growth rates from 2019 applied for Jan - Sep 2020 while full operating expenses of the MMO business of 2020 have been included. As such, the adjustments made for KingsIsle include a reduction of actual revenue and EBITDA to eliminate favorable revenue developments related to Covid-19 in the earlier part of 2020. (2) Numbers may not add up due to rounding] . The Transaction is in line with MGI's defined strategy of seeking highly value-accretive acquisitions which

strengthen its long term profitability and help to strengthen its position in online PC and mobile games. . FY 2021 revenue guidance for the acquired KingsIsle are expected revenues of USD 32 million ("Revenue Guidance")

and an expected adjusted EBITDA of USD 21 million (the "EBITDA Guidance"), with an expected 68 percent EBITDA

margin. . MGI's combined group EBITDA margin grows on a pro forma Jan - Sep 2020 basis from 21 percent to 28 percent

following the Transaction. Given the strong track record of Wizard101 as well as Pirate101, we expect stable and

further increasing cash flows from the free-to-play model with the loyal communities for existing IPs. In course of

post-merger integration further cost and revenues synergies will be realized. . The fixed Cash Consideration of USD 126 million represents an EV/EBITDA multiple of 6.0x based on the

EBITDA-Guidance. The Transaction is immediately value-accretive for the MGI shareholders based on this multiple

combined with an expected increase of EPS. . Taking into account the Earn-Out Consideration, the EV/EBITDA multiple will -depending on KingsIsles growth in

2021- be within a range of 5.8x - 7.3x. This assessment is based on higher revenues also generating an increased

EBITDA and includes the incremental EBITDA that may occur from a higher revenue base should an earn out become

payable. . Post transaction, the net leverage ratio of MGI will for a short term increase based on the Transaction to the

upper end of MGI's stated target range of 2-3x EBITDA, while the lower end is already planned to be reached again

within 12-18 months due to stronger Free-Cashflow generation combined with an increasing EBITDA. . The Total Consideration on a cash-and-debt-free basis is divided into a fixed component comprising four

installments totaling USD 126 million and three earn out levels which could result in USD 84 million of additional

payments. . As part of the Transaction, MGI has agreed to issue 11,676,241 new ordinary MGI shares at a price of EUR 2.14 per

share, representing a 4% discount to the average closing share price over the last twenty trading days on Xetra.

The new shares will be subscribed by funds advised by Oaktree Capital Management and will issue proceeds of EUR 25

million. Based on the Transaction the total amount of issued MGI shares will increase to 128,749,748 shares.

Oaktree Capital Management will hold about 9% of the total amount of shares. . Out of the total fix consideration of USD 126 million an amount of USD 63 million will be paid at closing, while

the remaining USD 63 million will be paid over the coming 18 months using liquidity and cash-flow of the MGI Group. . Closing of the Transaction is expected before the end of January 2021.

KingsIsle, was founded in 2005 and is a leading U.S. game developer and publisher. It's flagship title is the Online PC Game Wizard101 while also its second game Pirate101 is doing well. The mobile IP rights of Wizard101 and Pirate101 are included in the Transaction, while further -loss making- mobile activities are excluded from the Transaction and will be continued by one of the founders. The global pandemic and larger game updates positively impacted KingsIsles 2020 revenues and have been normalized to pre-Covid levels within the pro forma financials above for the valuation of the company. Wizard101 as well as Pirate101 currently almost exclusively generate revenues from the North-American market offering material European revenue growth potential to MGI. There will be further growth potential from launching the game on console as well as developing a mobile version for 2022 onwards.

Oaktree Capital Management, LP is a USD 140bn diversified global asset manager. The investment will be held by its European Private Equity Fund which has EUR 1bn available capital. Oaktree has supported many European management teams growing their platform companies into recognized market leaders including the creation and development of multi-billion listed companies. Oaktree has been able to conclude the required share capital increase within a short period of time because of their high degree of familiarity with MGI and the European games & media sector. Oaktree is supportive of management's plan to perform further accretive strategic investments in the online and mobile games segments. They also support management's strategy of combining media with games to deliver strong synergies within the group and as such also fully support further accretive acquisitions for the media segment.

Jens Knauber, COO Media and Games Invest

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January 18, 2021 01:50 ET (06:50 GMT)