Team17 buys US indie label, Hell Let Loose game IP

The AIM-traded firm described The Label as a United States-based indie publisher specialising in mobile subscription games content, with initial consideration totalling $24m (£17.76m), and additional earn out consideration of up to $16m the next three years.

It said the total consideration of up to $40m would be paid through a combination of cash and shares, which would be subject to a 12-month lock-in.

Team17 said $18m would be paid in cash from existing reserves, and 604,543 consideration shares would be issued, valued at $6m based on an issue price of 734.44p.

The further potential payment of up to $16m would be based on meeting “challenging” EBITDA performance targets, and also paid through a combination of cash and shares.

Team17 said the acquisition was a “significant strategic milestone” for the company, enabling its Games Label division to extend its reach into the high-growth mobile subscription segment of the industry, and further build on its reputation as a “major player” in the wider digital entertainment landscape.

“We are absolutely thrilled to be joining forces with The Label's entrepreneurial team, who are true pioneers in the delivery of quality mobile subscription games and technology,” said Michael Pattison, chief executive officer of Team17 Games Label.

“We are excited to tap into their unrivalled market and gaming experience to further take advantage of this growing market.”

Pattison described The Label as a “fantastic addition” to Team17, creating an “indie game powerhouse” across the PC, console and mobile platforms.

“We look forward to helping them build on their impressive track record of success, further enabling them to scale even greater heights in support of our ambitious growth aspirations.”

Hell Let Loose (HLL), meanwhile, is an existing third-party title for Team17, and was being acquired into its first-party family for initial consideration of £31m and a contingent earn-out consideration of up to £15m.

The company said the initial consideration would be satisfied through a combination of £19.75m in cash from existing reserves, and the issue of 1,531,780 shares valued at £11.25m based on an issue price of 734.44p, which would also be subject to a lock-in of 12 months.

Subject to meeting revenue performance targets over the next two years, an additional £5m, rising to a maximum of £15m, would become payable in cash.

A separate development contract was agreed to cover the transitional period over the next 18 months, which would include the delivery of services and “significant content” to support the next stage of growth in terms of revenue and intellectual property value for the HLL franchise.

HLL is an existing Team17 Games Label third-party title, and as a result of the acquisition it would become part of the label's first-party portfolio.

The firm said the acquisition supported it in further expanding its owned intellectual property footprint, and would enable it to extend the life cycle of the existing game, including further downloadable content and ongoing support as well as exploring potential sequels and other commercial opportunities.

Team17 said HLL would be the first signing under a new core gaming label to be created, which would use dedicated funds providing a specific focus to source the best core-gaming content globally, while further enhancing the breadth and depth of Team 17's overall portfolio.

The acquisition of the HLL intellectual property would be margin-enhancing, and was expected to deliver earnings accretion in the first full year of ownership.

“Hell Let Loose has quickly become a highly credible and innovative multiplayer tactical first-person shooter supported by a very passionate and highly engaged community with over six million players,” Michael Pattison added.

“Having built a close and extremely productive relationship with Black Matter already, we believe that by bringing Hell Let Loose into the Team17 stable, we can serve and build upon the needs of an ever-growing community, improve and expand upon the existing player experience and develop new ways to entertain and delight.

“We firmly believe Hell Let Loose can become the definitive large-scale team-based military simulation.”

At 1141 GMT, shares in Team17 Group were up 5.84% at 815p.