TinyBuild buys Versus Evil, Red Cerberus in deal worth up to $31m

The AIM-traded firm said Versus Evil would continue to operate as an independent label, expanding TinyBuild's publishing capacity and contributing to its intellectual property discovery process in new genres such as role-playing games (RPG) and strategy.

Founded in 2013 by Steve Escalante, who would continue to run the operations, Versus Evil had published 32 titles on all major platforms, which would bring TinyBuild's portfolio to more than 70 titles.

Since 2017, Red Cerberus has been providing Versus Evil and third-party studios with quality assurance, testing and localisation.

The company said the initial consideration for acquiring Versus Evil and Red Cerberus would be $12.5m in cash.

Deferred payments over the following three calendar years would be settled with newly-issued TinyBuild shares of up to $18.8m, subject to stretching financial targets being met, making for a total maximum consideration of up to $31.3m.

Versus Evil and Red Cerberus together generated $12m in revenues and a $0.2m EBITDA loss in 2020, which TinyBuild said was a year of “heavy investment” in Red Cerberus.

TinyBuild said it expected that the deal would be “marginally accretive” in 2021, and approximately 10% accretive at EBITDA level in 2022, with greater potential for return in the following years.

In addition, Versus Evil and Red Cerberus would add more than 250 staff to the company, bringing its total headcount to over 400.

“As a public company, we have a powerful platform from which we can deliver on our organic and merger and acquisition growth ambitions,” said TinyBuild chief executive officer Alex Nichiporchik.

“We are delighted to announce the acquisition of Versus Evil, a highly-regarded global video games publisher, as we continue to scale up our ambitions.

“Red Cerberus also gives us the opportunity to expand our access to talent in South America.”

Nichiporchik said the company’s goal was to expand its position as a “leading global developer and publisher”, focusing on intellectual property ownership while creating long-term scalable franchises across a range of media formats.

“In addition, we are actively looking at a number of other potential acqui-hires and larger-scale acquisitions to enhance our strategic and operational position.

“We remain excited and confident about delivering on our strategy for this year and beyond.”

At 1211 GMT, shares in TinyBuild were up 0.99% at 205p.