Game Digital (GMD) has announced the sale of Multiplay (UK), which operates an online game server-hosting business. The disposal reflects a tightening of GMD’s strategy, announced in August, to focus on customers’ gaming interests. We do not expect a material effect on forecasts, but the immediate cash receipt reduces the FY18e EV/EBITDA multiple to only 1.8x.
Game Digital |
Disposal of Multiplay Digital |
Business disposal |
Retail |
28 November 2017 |
Share price performance
Business description
Analysts
Game Digital is a research client of Edison Investment Research Limited |
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Game Digital (GMD) has announced the sale of Multiplay (UK), which operates an online game server-hosting business. The disposal reflects a tightening of GMD’s strategy, announced in August, to focus on customers’ gaming interests. We do not expect a material effect on forecasts, but the immediate cash receipt reduces the FY18e EV/EBITDA multiple to only 1.8x.
Year |
Revenue (£m) |
EBITDA |
PBT* |
EPS* |
DPS |
P/E |
EV/EBITDA (x)** |
Yield |
07/16 |
821.9 |
26.4 |
14.8 |
10.7 |
3.4 |
4.4 |
1.6 |
7.1 |
07/17 |
782.9 |
8.0 |
(4.3) |
(3.7) |
1.0 |
N/A |
2.7 |
2.1 |
07/18e |
793.2 |
12.3 |
0.2 |
0.1 |
0.0 |
N/A |
1.8 |
N/A |
07/19e |
796.3 |
15.0 |
1.9 |
0.9 |
0.0 |
52.9 |
1.4 |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **EV adjusted for immediate cash receipt of £17.1m.
GMD has announced the sale of Multiplay (UK), the owner of Multiplay Digital, which operates an online game server-hosting business for game developers, as well as a direct game hosting service available to consumers.
In August 2017 GMD announced that, following a strategic review, it had prioritised the development of experience-based gaming and eSports activities. As a result, the board had decided to evaluate strategic options for Multiplay's Digital division.
The disposal to Unity Technologies APS is for £19.0m cash, comprising £17.1m immediately (subject to adjustment for working capital) and £1.9m in escrow for 19 months.
Multiplay (UK)’s other business, eSports & Events, continues within the GMD corporate structure as part of GMD’s strategy to increase its involvement with customers’ gaming interests.
Multiplay Digital reported a pre-tax loss of £0.8m for FY17, and we anticipate that the disposal will not have a material effect on our forecasts. In our valuation, above, we adjust year-end net cash of £42.6m for the immediate cash consideration to indicate that the company is now on an FY18e EV/EBITDA rating of 1.8x.
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