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2016-10-31

THQ Nordic AB: THQ Nordic announces its intention to launch an initial public offering and listing on Nasdaq First North Stockholm

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART,
DIRECTLY OR INDIRECTLY, IN THE UNITED STATES, AUSTRALIA, CANADA, NEW
ZEALAND, HONG KONG, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION
WHERE SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL OR
WOULD REQUIRE REGISTRATION OR ANY OTHER MEASURES.

THQ Nordic AB (publ) ("THQ Nordic", the "Company", or the "Group")
today announces its intention to proceed with an Initial Public
Offering of the Company's B-shares on Nasdaq First North Stockholm
("the Offering"). THQ Nordic acquires, develops and publishes PC and
console games for the global games market.

The Board of Directors believes that THQ Nordic since 2011 has
established a strong platform from which it can accelerate its
growth, and that the Offering is a logical next step in the Company's
development that among other things will:

· finance further growth
· enhance the ability for THQ Nordic to use its shares to finance
future acquisitions

· broaden and strengthen THQ Nordic's shareholder base and offer a
liquid market for its B-shares

· strengthen THQ Nordic's recognition and brand with customers,
investors and the sector in general

The Offering in brief

· The Offering is expected to comprise in total 20 million B-shares,
of which 10 million new B shares and 10 million existing B-shares. In
addition, the Company is expected to grant Pareto Securities an
over-allotment option which is expected to imply that the Offering
may be increased by 2 million newly issued B-shares to cover
potential over-allotment in connection with the Offering

· The Offering is expected to be conducted at a fixed price of SEK
20 per B-share, corresponding to a total value of the Company's
shares of SEK 1.2 billion, before the Offering

· The Offering is thus expected to include an issue of new B shares
of SEK 200-240 million, depending on whether the over-allotment
option is exercised or not

· THQ Nordic intends to use the net proceeds from the Offering
mainly to finance: development and marketing of the current pipeline
projects; development of additional sequels to existing franchises;
and new acquisitions of franchises, game development studios or other
objects which complements the operations

· Several well-renowned investors have subject to certain
conditions, and at the same price as other investors, committed to
become cornerstone investors in the Offering

· A prospectus is expected to be registered with the Swedish
Financial Supervisory Authority (Finansinspektionen) and subsequently
published on or around 7 November 2016

· Pareto Securities is Global Coordinator and Sole Bookrunner,
Avanza is Selling Agent and Baker & McKenzie is legal advisor

Lars Wingefors, founder and Group CEO, comments:

"Since 2011, when the story about THQ Nordic began, we have
established a strong platform with more than 370 fantastic co-workers
and external game developers, an attractive and diversified games
portfolio and the strongest and most well invested pipeline to date.
In addition, we have shown strong growth and high profitability,
which makes us confident that our business model has been proven. Now
we are aiming towards accelerating our growth through our established
platform and business model, and we believe that the coming IPO will
support us in our growth strategy."

Kicki Wallje Lund, Chairman of the Board, comments:

"I am impressed of what the management has achieved in only five years
and thrilled about our next chapter as a listed THQ Nordic. The Board
sees this IPO as a natural next step in order to broaden and
strengthen our ownership, and to increase our financial flexibility
in the future as we are moving forward with our growth strategy.

THQ Nordic in brief

THQ Nordic acquires, develops and publishes PC and console games for
the global games market. The core business model consists of
acquiring established but currently underperforming franchises and
successively refining them.

The Company has a global presence, with its Group head office in
Karlstad, Sweden and its operational head office in Vienna, Austria.
As of 31 October 2016 the Company had four internal game development
studios - two in Sweden, one in Germany and one in the US - and
contracts with 19 external game studios in a number of different
countries. As of the same date the Company employed more than 370
people, of whom around 30 are employed within publishing operations,
around 70 within internal game development and more than 270 are
contracted external game developers.

Game portfolio and pipeline

THQ Nordic's game portfolio consists of both owned franchises (IP) and
publishing titles. The Company focuses on owning its own franchises
and developing and publishing these, and as of 31 October 2016 had
around 75 owned franchises in the portfolio. However, the Company
also publishes game titles for various strategic partners and at the
same time had around 60 publishing titles in its portfolio. In 2015
owned franchises generated 76% of sales and 82% of gross profit,
while publishing titles accounted for 22% of sales and 18% of gross
profit.

The Company owns franchises such as Darksiders, MX vs. ATV, Red
Faction and Titan Quest.

THQ Nordic's pipeline is strong and well-invested, with 10 announced
projects and 16 unannounced projects - including the Company's three
largest development projects to date with an estimated development
budget of SEK 65-125m each. In the first nine months of 2016 the
Company invested SEK 86m in ongoing projects, and as of 30 September
2016 the Company had capitalised investments in ongoing projects of
SEK 142m.

Distribution

The Company has global physical distribution capacity via retailers
such as Walmart, Gamestop and Amazon, as well as extensive digital
distribution capacity through established relationships and
agreements with around 40 digital distribution channels such as
Steam, PlayStation Store and Xbox Live.

The market in brief

In 2016 the global games market is expected to reach sales of roughly
USD 100 billion annually and is exhibiting strong growth with an
expected annual growth rate of 7% between 2015 and 2019. THQ Nordic
primarily operates within the PC and console segments. Sales within
the PC/MMO segment are in 2016 expected to constitute approximately
58% of the total market. THQ Nordic's end consumers are primarily
located in North America and Europe, and western countries are in
2016 expected to account, for around 50% of the total market.

Financial overview

THQ Nordic has developed strongly in recent years. Net sales growth in
the first nine months of 2016 was 52% compared with the same period
in 2015 and average annual growth in 2014 and 2015 was 44%. The
underlying EBIT margin was 31% in the first nine months of 2016 and
37% in 2015.

Investments in development projects have increased noticeably since
2013, both in absolute figures and as a proportion of EBITDA. In the
first nine months of 2016 a total of SEK 87.3 m was invested in game
development ("finished games" and "ongoing projects") and as of 30
September 2016 the Company had capitalised investment costs of SEK
153.8m related to game development. The rate of investment in the
first nine months of 2016 corresponded to 122% of EBITDA, which is an
increase compared with full-year 2015 when the equivalent figure was
60%.

January-December January-September
2013 2014 2015 2015 2016
Net sales, SEKm 102.3 178.0 212.9 114.5 173.7
Net sales growth 784% 74% 20% 5% 52%
EBITDA. SEKm 48.8 95.2 105.1 52.8 71.6
EBITDA margin 48% 53% 49% 46% 41%
Underlying EBIT(a), 40.4 79.9 78.9 40.5 54.4
SEKm
Underlying EBIT 39% 45% 37% 35% 31%
margin
Investments in game 15.2 34.8 63.0 46.3 87.3
development, SEKm
Investments in game 31% 37% 60% 88% 122%
development / EBITDA

(a) Underlying EBIT is defined as EBIT before amortization of IP
rights

For additional information, please contact:

Lars Wingefors, Group CEO

Tel: +46 708 471 978

E-post: lwingefors@thqnordic.com

Important information

This announcement is not and does not form a part of any offer for
sale of securities. Copies of this announcement are not being made
and may not be distributed or sent into the United States, Australia,
Canada, New Zealand, Hong Kong, Japan, South Korea or any other
jurisdiction in which such distribution would be unlawful or would
require registration or other measures. The securities referred to in
this announcement have not been and will not be registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and
accordingly may not be offered or sold in the United States absent
registration or an exemption from the registration requirements of
the Securities Act and in accordance with applicable U.S. state
securities laws. The Company does not intend to register any offering
in the United States or to conduct a public offering of securities in
the United States.

Any Offering of securities referred to in this announcement will only
be made by means of a prospectus. This announcement is not a
prospectus for the purposes of Directive 2003/71/EC (together with
any applicable implementing measures in any Member State, the
"Prospectus Directive"). Investors should not invest in any
securities referred to in this announcement except on the basis of
information contained in the aforementioned prospectus. In any EEA
Member State other than Sweden that has implemented the Prospectus
Directive, this communication is only addressed to and is only
directed at qualified investors in that Member State within the
meaning of the Prospectus Directive, i.e., only to investors who can
receive the offer without an approved prospectus in such EEA Member
State.

This communication is only being distributed to and is only directed
at persons in the United Kingdom that are (i) investment
professionals falling within Article 19(5) of the Financial Services
and Markets Act 2000 (Financial Promotion) Order 2005, as amended
(the "Order") or (ii) high net worth entities, and other persons to
whom this announcement may lawfully be communicated, falling within
Article 49(2)(a) to (d) of the Order (all such persons together being
referred to as "Relevant Persons"). This communication must not be
acted on or relied on by persons who are not Relevant Persons. Any
investment or investment activity to which this communication relates
is available only to Relevant Persons and will be engaged in o...

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