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Press release
Stockholm 20200917
In conjunction with the
acquisition, Stillfront announces preliminary unaudited
figures for H1 2020 for
Nanobit as well as unaudited forecasted figures for FY
2020 for
Nanobit.
INSIDE INFORMATION: Stillfront Group AB (publ) ("Stillfront"), a
leading free-to
-play powerhouse of gaming studios, today announced the signing
of an agreement
to acquire all shares in Nanobit d.o.o. ("Nanobit") (the
"Transaction"), a
leading developer and publisher of mobile games based in
Zagreb, Croatia. The
studio focuses on narrative lifestyle simulation role
playing games (RPG)
targeting a female audience. Nanobit is an established
studio with 29 titles
released, whereof 10 apps and 19 games, and more than 145
million lifetime
downloads. The flagship titles include Tabou Stories (2020),
My Story (2017) and
Hollywood Story (2015). The sellers are the joint founders
and main owners of
Nanobit, Alan Sumina and Zoran Vučinić, as well as certain
key employees.
TRANSACTION IN BRIEF
· The Transaction will be executed in
two tranches, whereof 78% of the shares
in Nanobit will be purchased (the
"First Tranche Transaction") for an initial
consideration of approx. USD 100
million on a cash and debt free basis (the
"First Tranche Consideration").
Approx. USD 30 million of the First Tranche
Consideration is payable in 280,542
newly issued shares in Stillfront to the
founders and the remaining approx. USD
70 million is payable in cash to the
sellers, corresponding to approx. 70%
payable in cash and approx. 30% in newly
issued shares in Stillfront.
· 22%
of the shares in Nanobit will be purchased (the "Second Tranche
Transaction")
for a second tranche consideration of an amount depending on the
EBITDA
development of Nanobit for the financial years 2021 and 2022 but however
not
exceeding USD 48 million on a cash and debt free basis (the "Second
Tranche
Consideration"). The Second Tranche Consideration will be payable by
Stillfront
in 2023, out of which 70% shall be paid in cash and 30% in newly
issued shares
in Stillfront.
· Nanobit has a preliminary unaudited IFRS
converted net revenue and adjusted
EBIT for the period H1 2020 of approx. SEK
325 million and approx. SEK 60
million respectively.
· Nanobit is expected to
generate net revenue of approx. SEK 600-640 million,
with approx. 17-22% in
adjusted EBIT margin, for the financial year 2020.
· Stillfront considers
that the Transaction will result in an attractive
earnings multiple for
Stillfront in line with previous acquisitions and should
be seen in the context
of Nanobit’s rapid growth. Calculated based on the First
Tranche Consideration,
for consistency with previous transactions where control
was gained on closing,
the implied EV/Adjusted EBITDA multiple is 6.4x.
· The total purchase price
payable by Stillfront in relation to the
Transaction cannot exceed USD 148
million on a cash and debt free basis.
· Closing of the First Tranche
Transaction is expected to occur on 30
September 2020.
“With the acquisition
of Nanobit, Stillfront expands our footprint into the
narrative lifestyle role
playing games (RPG) genre, further strengthening
Stillfront’s portfolio of
Simulation, Action and RPG games and broadening our
gaming audience. Nanobit is
an experienced and reputable studio with numerous
apps and games with a clear
niche within the lifestyle genre. The games
portfolio has shown strong growth
during the last year and we see a strong
growth potential going forward,
including a promising pipeline of new games”,
says Jörgen Larsson, CEO,
Stillfront.
“The mobile gaming industry is growing rapidly and is becoming
increasingly
global. Being in a position to be able to choose a strategic
partner, it is only
natural that we chose the one that fits our culture and
long-term vision. By
joining Stillfront Group, Nanobit gains additional
momentum that will allow us
to continue to grow and develop new ambitious plans
and projects. We look
forward to team up with Stillfront to further accelerate
the development of both
Nanobit and Stillfront Group, while our employees get
the opportunity to work
with some of the best in the industry", says Alan
Sumina and Zoran Vučinić”,
Joint Founders and Owners of Nanobit.
THE
TRANSACTION
The Transaction involves the initial acquisition of 78 % of the
shares in
Nanobit completion of which is expected to occur on 30 September
2020. Nanobit
will be consolidated into Stillfront’s consolidated financial
reporting from 1
October 2020.
Upon completion of the First Tranche
Transaction, approx. USD 100 million on a
cash and debt free basis will be paid
to the sellers as the First Tranche
Consideration, of which approx. USD 30
million is payable in 280,542 newly
issued shares in Stillfront to the founders
and the remaining approx. USD 70
million is payable in cash to the sellers. The
newly issued shares will be
issued based on the mandate to the board of
directors of Stillfront granted at
the annual general meeting held on 14 May
2020. The number of shares in relation
to the First Tranche Consideration
corresponds to approx. USD 30 million and has
been calculated by using the
volume weighted average price per share in
Stillfront traded on Nasdaq First
North Premier Growth Market during the ten
trading days preceding the date
hereof (excluding the date hereof) converted
into USD at the average exchange
rate between SEK and USD of the Swedish Central
Bank (Sw. Riksbanken) published
at https://www.riksbank.se/en-gb/ during the
same period, i.e. the subscription
price per share related to the First Tranche
Consideration amounts to SEK
937.076. This corresponds to a dilution of 0.81% on
a fully diluted basis (i.e.
based on the total number of shares and votes
registered in Stillfront after
the share issue in relation to the First Tranche
Transaction). The First
Tranche Consideration will be subject to adjustment
based on the cash,
financial debt, transaction expenses and the difference
between target and
actual indebtedness of Nanobit as of the date of completion
of the First
Tranche Transaction. The adjustment amount is payable by the
sellers or
Stillfront (as the case may be) in cash.
Further, Stillfront will acquire the
remaining 22% of the shares in Nanobit in
2023 for the Second Tranche
Consideration, which is depending on the EBITDA
development of Nanobit for the
financial years 2021 and 2022 but however not
exceeding USD 48 million on a
cash and debt free basis, out of which 70% shall
be paid in cash and 30% in
newly issued shares in Stillfront. The Second Tranche
Consideration is payable
upon completion of the Second Tranche Transaction in
2023. The total purchase
price payable by Stillfront in relation to the
Transaction cannot exceed USD
148 million on a cash and debt free basis.
The subscription price for newly
issued shares related to the Second Tranche
Consideration will be based upon
the volume weighted average price of the shares
in Stillfront traded on Nasdaq
Firth North Premier Growth Market for a period of
ten trading days prior to and
ten trading days following Stillfront’s
announcement of financial results for
the financial year 2022 and for purposes
of determining the number of shares in
Stillfront to be issued, the volume
weighted average price of the shares in
Stillfront in SEK shall be converted
into USD at the average exchange rate
between SEK and USD of the Swedish Central
Bank (Sw. Riksbanken) published
at https://www.riksbank.se/en-gb/ during
the same period as set forth
above.
The cash portion of the First Tranche Consideration is intended to be
financed
by cash at hand and available credit facilities and the adjustment
consideration
(if any) of the First Tranche Consideration as well as the cash
portion of the
Second Tranche Consideration are intended to be financed through
internal cash
generation and available credit facilities.
The 280,542 newly
issued shares in Stillfront that are to be issued to the
founders upon payment
of the First Tranche Consideration are subject to
customary transfer
restrictions during a period of eighteen months from the date
the founders are
registered as holder of such shares. The newly issued shares in
Stillfront that
are to be issued to the sellers upon payment of the Second
Tranche
Consideration are subject to customary transfer restrictions during a
period of
twelve months from the date the founders are registered as holder of
such
shares.
Due to that Stillfront will acquire the remaining 22% of the shares in
the
Second Tranche Transaction, Stillfront and the founders will enter into
a
shareholders' agreement in connection with the completion of the First
Tranche
Transaction. The shareholders' agreement will be entered into in order
to
establish certain terms and conditions regarding the business of Nanobit and
in
order to regulate the internal relationship between Stillfront and the
founders
with respect to ownership of shares in and governance of Nanobit.
The
shareholders' agreement will be terminated when the Second Tranche
Consideration
has been paid and Stillfront is the owner of 100% of the shares
in Nanobit.
Further, Stillfront and the founders will, in connection with the
completion of
the First Tranche Transaction, enter into a share pledge
agreement in which the
remaining shares in Nanobit to be purchased in the
Second Tranche Transaction
will be pledged to Stillfront by the founders on
closing of the First Tranche
Transaction.
The founders, Alan Sumina and Zoran
Vučinić, and other key employees will remain
within Nanobit and be part of the
management of Nanobit post-closing of the
First Tranche Transaction.
ABOUT
NANOBIT
Nanobit was founded in 2008 by software engineers Alan Sumina and
Zoran Vučinić
as the main owners. The studio focuses on narrative lifestyle
simulation role
playing games (RPG) targeting a female audience. Nanobit is an
established
studio with 29 titles released, whereof 10 apps and 19 games, and
more than 145
million lifetime downloads. The flagship titles include Tabou
Stories (2020), My
Story (2017) and Hollywood Story (2015). Nanobit is based in
Zagreb, Croatia and
employs approx. 125 people in total.
PRELIMINARY UNAUDITED
FIGURES FOR NANOBIT FOR H1 2020
The below presented preliminary unaudited
financials are solely intended to
describe the financial situation of
Stillfront post-closing of the Transaction.
All figures are preliminary and
unaudited.Nanobit has HRK as its reporting
currency. The HRK figures have in
the following been translated into SEK by
using the average FX rate for the
period of January to June 2020, with HRK/SEK
at 1.3724.
Nanobit has a
preliminary IFRS net revenue of approx. SEK 325 million and
adjusted EBIT of
approx. SEK 60 million for the period January – June 2020 which
represents an
increase of approx. 17.2% on Stillfront's total net revenue and
approx. 8.9% on
Stillfront's total adjusted EBIT for the period January – June
2020.
UNAUDITED
FORECAST FIGURES FOR NANOBIT FOR THE FULL YEAR 2020
The below presented
unaudited forecast figures are solely intended to describe
the hypothetical
financial situation of Nanobit to display the potential
financial growth of
Nanobit. All figures are preliminary and unaudited.
Nanobit is expected to
generate net revenue of approx. SEK 600-640 million, with
approx. 17-22% in
adjusted EBIT margin for the financial year 2020. The
financial assumptions are
based on Nanobit’s management accounts and projected
growth driven mainly by
the three live games Tabou Stories, My Story and
Hollywood Story and projected
game pipeline with the new game, Fashion Nation,
currently in soft
launch.
CONDITIONS FOR THE COMPLETION OF THE FIRST TRANCHE
TRANSACTION
Completion of the First Tranche Transaction is conditional on a
number of
closing deliverables including but not limited to repayment of bonds
issued by
Nanobit and repayment of external debts.
TRANSACTION
COSTS
Stillfront’s total costs for the Transaction are estimated to amount to
approx.
SEK 12 million that will be accounted for in the Q3 2020
report.
FINANCIAL AND LEGAL ADVISORS
DLA Piper Sweden is legal advisor and EY
is financial advisor for Stillfront in
connection with the Transaction. Latham
& Watkins is legal advisor and Aream &
Co. is financial advisor for the sellers
in connection with the Transaction.
CONFERENCE CALL FOR INVESTORS, ANALYSTS
AND MEDIA
Representatives of Stillfront will participate in a conference call
on September
18, at 10.00 CEST. To participate, please use the details set out
below.
To participate by telephone, please dial;
SE: +46 8 505 583 58
UK: +44
33 330 092 63
US: +1 83 324 984 07
To participate via
audiocast;
https://tv.streamfabriken.com/2020-09-18-press-conference
For
additional information, please contact:
Jörgen Larsson, CEO, Stillfront
Group
Phone: +46 70 321 18 00
E-mail: jorgen@stillfront.com
This information
is information that Stillfront Group AB (publ) is obliged to
make public
pursuant to the EU Market Abuse Regulation. The information was
submitted for
publication, through the agency of the contact person set out
above, at
17.40 CEST on 17 September 2020.
About Stillfront
Stillfront is leading
free-to-play powerhouse of gaming studios. Our diverse and
exciting games
portfolio has two common themes; loyal users and long lifecycle
games. Organic
growth and carefully selected and executed acquisitions embody
our growth
strategy and our +800 co-workers thrive in an organization that
engenders the
spirit of entrepreneurship. Our main markets are the US, Germany,
MENA, France
and Canada. We are headquartered in Stockholm, Sweden and the
company, is
listed on Nasdaq First North Premier Growth Market.
For further information,
please visit: stillfront.com
Certified Adviser:
FNCA, Phone: +46 8 528 00 399
E-mail: info@fnca.se
IMPORTANT INFORMATION
The release, announcement or
distribution of this press release may, in certain
jurisdictions, be subject to
restrictions. The recipients of this press release
in such jurisdictions, in
which this press release has been released, announced
or distributed, should
inform themselves of and follow such restrictions. The
recipient of this press
release is responsible for using this press release, and
the information
contained herein, in accordance with applicable rules in each
jurisdiction.
This press release does not constitute an offer, or a solicitation
of any
offer, to buy or subscribe for any securities in Stillfront in
any
jurisdiction, neither from Stillfront nor from someone else.
This press
release does not identify or suggest, or purport to identify or
suggest, the
risks (direct or indirect) that may be associated with an
investment in the new
shares. Any investment decision in connection with the
share issue must be made
on the basis of all publicly available information
relating to Stillfront and
Stillfront’s shares. Such information has not been
independently verified by
Stillfront. The information contained in this press
release is for background
purposes only and does not purport to be full or
complete. No reliance may be
placed for any purpose on the information contained
in this press release or
its accuracy or completeness.
This press release does not constitute a
recommendation concerning any
investor’s option with respect to the share
issue. Each investor or prospective
investor should conduct his, her or its own
investigation, analysis and
evaluation of the business and data described in
this press release and publicly
available information. The price and value of
securities can go down as well as
up. Past performance is not a guide to future
performance.
This press release does not constitute or form part of an offer
or solicitation
to purchase or subscribe for securities in the United States.
The securities
referred to herein may not be sold in the United States absent
registration or
an exemption from registration under the US Securities Act of
1933 (the
"Securities Act"), as amended, and may not be offered or sold within
the United
States absent registration or an applicable exemption from, or in a
Transaction
not subject to, the registration requirements of the Securities
Act. There is no
intention to register any securities referred to herein in the
United States or
to make a public offering of the securities in the United
States. The
information in this press release may not be announced, published,
copied,
reproduced or distributed, directly or indirectly, in whole or in part,
within
or into, Australia, Canada, Japan, Hong Kong, New Zealand, Singapore,
South
Africa, Switzerland, the United States or in any other jurisdiction where
such
announcement, publication or distribution of the information would not
comply
with applicable laws and regulations or where such actions are subject
to legal
restrictions or would require additional registration or other
measures than
what is required under Swedish law. Actions taken in violation of
this
instruction may constitute a crime against applicable securities laws
and
regulations.
This announcement is not a prospectus for the purposes of
Regulation (EU)
2017/1129 (the "Prospectus Regulation") and has not been
approved by any
regulatory authority in any jurisdiction. Stillfront has not
authorized any
offer to the public of shares or rights in any member state of
the EEA and no
prospectus has been or will be prepared in connection with the
Share Issue. In
any EEA Member State, this communication is only addressed to
and is only
directed at qualified investors in that Member State within the
meaning of the
Prospectus Regulation.
Forward-looking statements
This press
release contains certain forward-looking statements that reflect
Stillfront’s
current views or expectations of future events and financial and
operational
performance, including statements regarding guidance, planning,
prospects and
strategies. Words such as “intends”, “anticipates”, “expects”,
“plans”,
“estimates”, “may”, and similar expressions regarding indications
or
predictions of future developments or trends that are not based on
historical
facts, constitute forward-looking information. Although Stillfront
believes that
these statements are based upon reasonable assumptions and
expectations,
Stillfront cannot give any assurances that any such
forward-looking statements
will materialize. Because these forward-looking
statements involve both known
and unknown risks and uncertainties, actual
results may differ materially from
the information set forth in the
forward-looking information. Such risk and
uncertainties include but are not
limited to the following: Nanobit's future
business development; the expected
growth of Nanobit’s user base; the
expectation regarding the rate at which
Nanobit can gain active users; Nanobit's
ability to monetize the user base; and
Nanobit's ability to launch new products
according to plan. Forward-looking
statements in this press release apply only
at the time of the press release
and are subject to change without notice.
Stillfront undertakes no obligation
to publicly update or revise any forward
-looking statements as a result of new
information, future events or otherwise,
other than as required by applicable
law or stock market regulations.
In the United Kingdom, this press release and
any other materials in relation to
the securities described herein is only
being distributed to, and is only
directed at, and any investment or investment
activity to which this document
relates is available only to, and will be
engaged in only with, “qualified
investors” who are (i) persons having
professional experience in matters
relating to investments who fall within the
definition of “investment
professionals” in Article 19(5) of the Financial
Services and Markets Act 2000
(Financial Promotion) Order 2005 (the “Order”);
or (ii) high net worth entities
falling within Article 49(2)(a) to (d) of the
Order (all such persons together
being referred to as “relevant persons”). In
the United Kingdom, any investment
or investment activity to which this
communication relates is available only to,
and will be engaged in only with,
relevant persons. Persons who are not relevant
persons should not take any
action on the basis of this press release and should
not act or rely on
it.
Information to distributors
Solely for the purposes of the product
governance requirements contained within:
(a) EU Directive 2014/65/EU on
markets in financial instruments, as amended
(“MiFID II”); (b) Articles 9 and
10 of Commission Delegated Directive (EU)
2017/593 supplementing MiFID II; and
(c) local implementing measures (together,
the “MiFID II Product Governance
Requirements”), and disclaiming all and any
liability, whether arising in tort,
contract or otherwise, which any
“manufacturer” (for the purposes of the MiFID
II Product Governance
Requirements) may otherwise have with respect thereto,
the shares in Stillfront
have been subject to a product approval process, which
has determined that such
shares are: (i) compatible with an end target market
of retail investors and
investors who meet the criteria of professional clients
and eligible
counterparties, each as defined in MiFID II; and (ii) eligible for
distribution
through all distribution channels as are permitted by MiFID II
(the “Target
Market Assessment”). Notwithstanding the Target Market Assessment,
distributors
should note that: the price of the shares in Stillfront may
decline and
investors could lose all or part of their investment; the shares in
Stillfront
offer no guaranteed income and no capital protection; and an
investment in the
shares in Stillfront is compatible only with investors who do
not need a
guaranteed income or capital protection, who (either alone or in
conjunction
with an appropriate financial or other adviser) are capable of
evaluating the
merits and risks of such an investment and who have sufficient
resources to be
able to bear any losses that may result therefrom. The Target
Market Assessment
is without prejudice to the requirements of any contractual,
legal or regulatory
selling restrictions in relation to the Share Issue.
For
the avoidance of doubt, the Target Market Assessment does not constitute:
(a)
an assessment of suitability or appropriateness for the purposes of MiFID
II;
or (b) a recommendation to any investor or group of investors to invest in,
or
purchase, or take any other action whatsoever with respect to the shares
in
Stillfront.
Each distributor is responsible for undertaking its own target
market assessment
in respect of the shares in Stillfront and determining
appropriate distribution
channels.