Take-Two Interactive Buys Nordeus for $378M; Shares Drop

Take-Two Interactive Software, Inc. (TTWO) revealed that it has acquired privately-held Nordeus, a mobile games developer in a cash and stock deal valued at $378 million.

Take-Two Interactive Software is a leading developer, publisher, and marketer of interactive entertainment for consumers across the world. Shares of the company were down 3.2% to close at $176.91 on June 2.

The acquisition will enhance Take-Two’s mobile business and sports offerings with the inclusion of Nordeus’ Top Eleven, a successful mobile soccer management game with over 240 million registered users.

The total deal consideration of $378 million includes an upfront payment of $225 million, which consists of cash and newly issued Take-Two common stock worth $90 million. In addition, the terms of the agreement include earn-out consideration dependent on Nordeus achieving EBITDA results above certain thresholds during the first two years, following the acquisition. (See Take-Two Interactive Software stock analysis on TipRanks)

Notably, the number of shares to be issued will be obtained by dividing $90 million by the weighted average closing price per share on the Nasdaq Global Select Market during the 30-day period, which ends on the second trading day before the closing date.

TTWO intends to fund the cash portion of the deal with available cash on the balance sheet.

The company acquired Social Point in 2017 and Playdots in 2020. The acquisitions go well with the company’s strategic initiative to bolster its mobile business.

TTWO’s EVP and Head of Strategy and Independent Publishing, Michael Worosz, commented, “Our investment in Nordeus strengthens further Take-Two’s mobile game business, is highly complementary to Social Point and Playdots, and broadens our sports portfolio with our first-ever soccer offerings.”

Following the acquisition, Stifel Nicolaus analyst Drew Crum maintained a Buy rating and a price target of $237 (40% upside potential) on the stock.

Crum said that he expects slight accretion from the announced acquisition, which will enhance Take-Two’s presence in mobile and the sports category, especially in the soccer category.

Overall, the stock has a Moderate Buy consensus rating based on 11 Buys, 6 Holds, and 1 Sell. The average analyst price target of $213.91 implies 20.9% upside potential from current levels. Shares of TTWO have jumped 36.8% over the past year.

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