Keywords Studios Plc (LON:KWS) has acquired Fire Without Smoke (FWS) for up to £5.2m. FWS is a creative and marketing services provider to the video games industry. This is an incremental opportunity for KWS to work with games producers on marketing projects (eg trailers). At 7.4x trailing adjusted PBT, this was at the lower end of KWS’s recent acquisition range, and further upside via cross-selling synergies with pre-existing studios is likely.
The acquisition expands KWS’s marketing capabilities, particularly with regard to the creation of trailers and other marketing collateral. Tapping into marketing department expenditure contrasts significantly with the bulk of the company’s pre-existing revenues, which are typically funded out of games producers’ development budgets. The recent move towards co-development (eg the Sperasoft acquisition) could naturally lead to an improved pipeline of opportunities for FWS as a result of the strengthening relationships with games publishers.
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