A Bird In The Hand

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What's going on?

Sega swooped in with an offer to buy Angry Birds creator Rovio Entertainment on Monday.

What does this mean?

Finlands Rovio Entertainment soared to the public markets in 2017, riding the tailwinds of Angry Birds the first mobile game to reach a billion downloads. But that initial hype crash-landed when financial disclosures left investors ruffled, and Rovios value took a nosedive its never really recovered from. Thats probably one reason that recent months have seen the company fielding buyout offers from a flock of interested parties. And now shareholders seem to have found a satisfactory nest egg: Japanese video game maker Sega flew in with a proposal to acquire Rovio in a nearly $800 million deal over 60% more than it was worth before rumors of other offers started swirling. And with Segas traditional arcade machine business dwindling, doubling down on console and mobile gaming could make sense.

Why should I care?

Zooming in: Segas feathering its nest.
Segas already hatching plans to search for global hits in its own back catalog, with big-budget reboots of classics like Crazy Taxi in the works. And with the global gaming market projected to reach $263 billion by 2026, that could be wise. This latest move could add to that revitalization, too: the mobile gaming sector is poised to grow particularly rapidly and in three years time, its tipped to account for as much as 56% of the overall gaming market.

For markets: Lame duck.
Mind you, if Segas stock reaction is anything to go by, investors were less than keen on the deal and thats understandable. Angry Birds may be a household name, but its best days are probably behind it. To win investors over, then, Segas going to have to squeeze every last drop of mobile expertise out of Rovio, making good on promised synergies to prove this bet makes sense.

Originally posted as part of the Finimize daily email.

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