U.S. video-game studio Jam City Inc. has completed its acquisition of Montreal-based game developer Ludia Inc. for US$165-million.
Founded in 2007, Ludia develops mobile video games that users can play on their phones. It specializes in creating games based on the intellectual property of popular television shows such as Family Feud and The Bachelor, and films including Jurassic Park. The company earns revenue through in-app purchases, which users buy to enhance their gaming experiences or bypass advertising.
Ludia is owned by FremantleMedia, a multinational television production company that includes TV hits such as America’s Got Talent, The X Factor and Too Hot to Handle in its portfolio. In 2009, Fremantle acquired an initial 29-per-cent stake in Ludia, and eventually acquired full ownership of the company.
Ludia’s chief executive officer, Alex Thabet, told The Globe and Mail that the acquisition by Jam City was years in the making. As Ludia’s game portfolio expanded outside of those based on Fremantle properties, it made more sense for Fremantle to sell Ludia. Mr. Thabet said he has had conversations with Jam City for the past three years, during which time the sector was consolidating.
“In the context of an industry that was increasingly becoming more competitive with a lot of consolidation happening, we felt it was necessary for us to join a bigger group,” said Mr. Thabet, who will remain at the company. Jam City considered going public through a special-purpose acquisition company – an entity formed solely to purchase other companies – in a transaction that would have included the takeover of Ludia – and would have valued Jam City at US$1.2-billion, according to media reports – but the parties opted to stay private.
Jam City’s acquisition adds more heft to its portfolio of IP-based mobile games that are based on box-office favourites such as Frozen and the Harry Potter series. The company also raised $US350-million in debt and equity financing from video-game developers South Korea-based Netmarble Corp. and its Canadian subsidiary, Kabam, and U.S. private equity firm Fortress Investment Group.
“The combined business has a strong, diversified portfolio of mobile games driven by both owned and licensed IP and is well positioned to remain a market leader,” Ian Schnider, a managing director at Fortress, said in a press release.
The fresh capital will help Jam City continue to build its portfolio. The company has acquired several video-game assets in the past five years, including the acquisition of Toronto-based Uken Games in 2018. Ludia will be a standalone unit within Jam City.
Mr. Thabet said it can take two to three years to develop a mobile game, with a team as large as 100 people. He said joining Jam City will give Ludia the scale to continue winning business from franchises that are household names.
“A big movie studio like Universal or Disney is only going to sit at the table with established players that will really be able to bring some of their top franchises to the full potential of what they can become as a game, or a mobile game in our case.”
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