Keywords Studios enters Australian market with Tantalus investment

Dublin-headquartered Keywords Studios has expanded its reach to Australia with the acquisition of an 85 per cent stake in game developer Tantalus Media.

The deal, which is worth up to $46.8 millon, provides a platform for further growth in the region, and follows the group’s strategy to establish itself as the go-to technical and creative services platform for the video games industry.

The Melbourne-based game developer, which was established in 1994, has been involved in the development of a number of major titles, including Age of Empires, The Legend of Zelda: Twilight Princess, Cities Skylines, Sonic Mania and Mass Effect.

"Tantalus brings 27 years of experience of video game development in Australia for some of the largest global publishers and leading titles. The talented team, led by Tom Crago and supported by an experienced management team, has an impressive track record of development work on major franchises including Age of Empires, Sonic Mania, The Legend of Zelda, Mass Effect, Cars and Cities: Skylines," said Jon Hauck, joint interim chief executive of Keywords Studios.

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“We are delighted to welcome Tantalus to the Keywords Studios family. As our first investment in Australia, we are very excited to work with Tom and his talented team who will bring invaluable expertise and market knowledge as we expand our presence in this attractive and growing region.”

The company generated adjusted earnings before interest, tax, depreciation and amortisation $6 million in 2020.

Keywords Studios will pay an initial consideration of $30.6 million, comprising $18.4 million in cash from existing resources and $12.2 million in new ordinary shares, with a deferred consideration of up to $16.2 million in a mix of cash and new ordinary shares. The latter will be based on performance targets for Tantalus over two years.

Mr Crago said the two companies shared the same outlook on the opportunities within the video game industry. “This provides us with a great platform for further expansion, and with the talent and expertise available in this part of the world, we are very excited about the future,” he said. “ For all of us, that means being able to work on more games than ever, with our existing publisher partners and beyond.”

Earlier this week it was announced Keywords chief executive Andrew Day would take a temporary leave of absence from the business for health reasons. Mr Hauck, who is the company’s CFO, and and Sonia Sedler, COO, have been appointed as joint interim chief executives until he resumes his role.