Muckle advise global gaming group on £65m North East acquisition
Our corporate and tech lawyers have advised Thunderful Group AB on its 100 percent acquisition of the Sunderland-based development studio Coatsink Software Ltd.
The deal completed for an upfront consideration of £23m plus an earn-out component potentially resulting in a maximum total consideration of £65.5m. Following the transaction co-founders and several key employees of Coatsink will become shareholders in Sweden-based Thunderful.
Adam Rayner, Stuart Grieve and Stephanie Brown acted for Thunderful, with support from our technology and digital lawyers. The team worked closely with the gaming group’s Swedish lawyers Setterwalls Advokatbyrå AB to help deliver the deal.
Coatsink, headquartered in Sunderland, UK, was formed in December 2009 by Tom Beardsmore and Paul Crabb. Today it is a diverse and versatile development studio and publisher, which has built a strong industry reputation.
Recent accolades include the critically acclaimed Oculus Quest launch title Shadow Point, the Oculus Go title Augmented Empire, the development partnership with Boneloaf on Gang Beasts, and the publishing partnership on the hit title Onward.
'Powerful cash flow'
Thunderful will pay £23m upfront, of which £11.5m is paid in cash and £11.5m is paid in newly issued ordinary Thunderful shares. In addition, Thunderful will pay an earn-out component subject to Coatsink’s performance in 2021 and 2022.
The earn-out consideration, which will be paid in a mix of cash and Thunderful shares, is capped at £42.5m which is reached only if Coatsink exceeds its financial targets for 2021 and 2022. The total maximum consideration for the acquisition is thus £65.5m.
”We have established a good relationship with the founders and key personnel of Coatsink and believe that their strong work ethics and corporate culture will be a very valuable strong complement to Thunderful’s existing businesses.
“Although it’s just a first step, this is a good example of how we intend to leverage the Group’s powerful cash flow going forward”, says Thunderful Group’s CEO, Brjann Sigurgeirsson.
North East's 'world class' tech sector
Adam Rayner, corporate partner at Muckle LLP, said: “This transaction is a fantastic deal for all businesses involved, and for the region.
“The North East tech sector has a world class reputation and we are delighted to have played our part in delivering this deal which stands to further the growth targets of both businesses and bring further investment to the region.
“Muckle works with international lawyers more than many would expect a North East law firm to,” he added. “Setterwalls Advokatbyrå AB have been fantastic to work with and we were able to deliver the complex, multijurisdictional legal elements relatively smoothly.”
The acquisition is in line with Thunderful’s strategy to expand its Games segment by adding attractive platform partnerships and publishing deals. The acquisition will allow both companies to accelerate and strengthen ongoing and future development projects.
Currently, Coatsink is working on 5 announced and unannounced in-house projects, including Jurassic World Aftermath and Transformers Battlegrounds, as well as several work-for-hire and publishing projects, which will strengthen Thunderful’s existing development pipeline in 2021 and 2022.
Coatsink will remain an independent development studio and will be reported as part of Thunderful Games.