iCandy levels up with a marquee $44.5m acquisition of Lemon Sky Studios
Link copied to
The acquisition will create one of the largest game development studios in the Australasia region.
ASX-listed games developer iCandy Interactive (ASX:ICI) is getting on the M&A trail – in a big way.
The company announced this morning that it’s signed a sale agreement to acquire 100% of shares in Lemon Sky Studios.
With an extensive portfolio of partnerships with the biggest global players in the industry, Lemon Sky has established itself as a leading studio in the Southeast Asia region.
The combined entity will form one of the largest gaming studios in the Australasia region, with “more than 450 full-time employees who are highly skilled in game design, development, game art and animation production”, iCandy said.
Founded in 2006, Lemon Sky is a leading games and animation studio with an “impressive portfolio of developing AAA game titles”, iCandy said.
AAA is a term used in the games development industry to describe products with the “highest visual quality and gaming experience for gamers”, ICI said.
Typically, such games are also built with higher development and marketing budgets.
Lemon Sky has worked on a string of big-budget AAA titles, including Uncharted: The Lost Legacy, the Final Fantasy franchise, StarCraft: Remastered and Marvel’s Spiderman.
In that context, iCandy’s acquisition gives it a leading position in the AAA market, at a point where global gamers, marketers and game developers are building solutions for the online ‘metaverse’.
The metaverse is an “emerging technology concept where users play and work in a virtual world that is connected online”, where the use of new platforms such as virtual reality and augmented reality are expected to play an increasingly greater role.
The concept has gathered considerable traction in recent weeks, following the pivot of tech giant Facebook which has renamed itself Meta in anticipation of major growth in the next generation of online gaming and content.
With its acquisition of Lemon Sky, iCandy’s combined entity “will have among the best-in class-skills and experience to develop AAA games, as well as expertise in developing its own Intellectual Properties and publishing games independently,” iCandy says.
“These abilities will position iCandy well to be among the pioneering game developers in making AAA games for the metaverse.”
The company also cited additional benefits that will flow from the deal, including a leap in human capital and in-house talent via Lemon Sky’s leading development team.
In addition, iCandy and Lemon Sky are a natural fit in terms of their strategic direction, given both companies are already working together on game titles under development.
Lastly, when it comes to the global gaming industry – forecast to be worth $360bn by 2025 – size matters.
By joining forces with Lemon Sky, iCandy will become “one of the largest players of its kind in Southeast Asia, Australia and New Zealand”, the company said.
Thus, the acquisition “will put the combined entity prominently on the map and ensure that it is poised to become a global player that’s well recognised by the international gaming industry”, iCandy said.
Under the terms of the deal, iCandy will acquire Lemon Sky for MYR135 million ($44.5 million) in a cash and share-based transaction.
The deal will comprise:
The shares will be escrowed for two years from the date of issue.
In line with ASX rules, the deal is conditional upon the approval of ICI shareholders at an Extraordinary Meeting which the board will organise as soon as possible.
“Barring unforeseen circumstances, the Acquisition is expected to be completed within three months,” iCandy said.
This article was developed in collaboration with iCandy Interactive, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.