US$26.5 million acquisition of StoryToys
2nd July 2021
Team17, a global games entertainment label, creative partner and developer of independent (“indie”) premium video games, is pleased to announce it has entered into an agreement to acquire the business and assets of StoryToys (via the acquisition of its parent company TouchPress Inc.) (the “Acquisition”).
StoryToys is a world-class developer and publisher of educational entertainment (“edutainment”) apps for children, and the Acquisition establishes a new highly complementary and fast growing edutainment vertical for Team17, strengthening the enlarged Group’s position as a leading games entertainment business.
The initial consideration for the Acquisition is US$26.5 million, with a further maximum US$22.5 million payable in cash on delivery of certain targets by the vendors within three years following completion of the Acquisition and will be funded from Team17’s existing cash reserves.
- Founded in 2011, StoryToys is a multi-award-winning, leading player in edutainment apps for children under the age of eight and has produced apps with many leading children’s brands, including The LEGO® Group, Disney, Pixar, Penguin, Sesame Workshop, Dick Bruna, Warner Bros, Hasbro, and Nickelodeon
- With over 100 million app downloads, StoryToys has been the recipient of numerous awards for the quality of its products, including Kidscreen Award Winner 2021, Licensing International Excellence Awards Winner 2020, KAPi Awards Winner 2020, numerous Children’s Technology Review Editor’s Choice Awards, and multiple Bologna Ragazzi Digital Awards
- As a multi award-winning brand and a well-known name in the edutainment industry, StoryToys has built an unrivalled position in the market
- The Acquisition will broaden Team17’s existing skillset and customer reach
- The Acquisition is profitable and growing and expected to be immediately earnings accretive
- The Acquisition brings a talented team to Team17, who will continue to operate and function as an independent vertical within the enlarged Group, and maintain the StoryToys brand
- Supported by Team17, the ambition is to grow StoryToys to be the global number one children’s edutainment brand for ages 8 and under
Information on StoryToys
Founded in 2011 and based in Ireland, StoryToys is a leading developer of educational apps, targeting the pre-school market of children aged two to seven years old. StoryToys apps have been downloaded over 100 million times across 120 countries, and its educational entertainment apps are produced in as many as 28 different languages.
StoryToys’ mission is to create apps for children that engage them in well-rounded activities designed to help them learn, play, and grow. Parents get peace of mind seeing their children simultaneously learning and having fun.
Companies with leading brands focused on young children and seeking to develop high quality educational content for the digital domain work with StoryToys, who undertake the translation of brand values into engaging and educational interactive products for the digital domain.
StoryToys generates revenues from its apps through subscription, in-app purchases, and paid apps. It follows the child’s development journey and migrates users throughout their portfolio of content as they grow. Whilst there is an obvious natural churn in players as children outgrow the apps, there is also a constant flow of new customers primed to replace aged-out users.
The team at StoryToys has significant experience and relationships with some of the world’s leading education, games and media giants. The entire team will join Team17 as part of the Acquisition and the enlarged Group will continue to leverage their knowledge and expertise to drive future growth.
StoryToys has historically demonstrated its ability to drive the user experience with regular updates to content, new features, and the introduction of new products. This momentum is due to continue into H2 2021 and beyond, with a strong pipeline of new product launches planned for the period, along with ongoing discussions with new key partners.
Strategic rationale for the Acquisition
The Acquisition of StoryToys is in line with the Group’s existing growth strategy and is expected to bring a number of benefits to the Group, including:
- Enables Team17 to enter a new, highly complementary edutainment vertical, further strengthening Team17’s position as a provider of games entertainment to a broader audience
- The Group believes demand for educational entertainment apps, which has accelerated as a result of the COVID-19 pandemic, focused on the pre-school audience will see significant growth going forward. According to Technavio, the global educational apps market forecast to grow by over US$46 billion between 2020 and 2024, with CAGR of 26%
- Supported by Team17’s strategic partner relationships, combined with consistent growth and commercialisation experience, StoryToys has the potential to build on its existing foundations and accelerate its current growth trajectory
- The Acquisition will deliver cross collaboration opportunities between Team17 and StoryToys, such as writers, artists, musicians, programmers, editors and designers, in addition to sales and marketing
- The combination of both Team17 and StoryToys also creates exciting commercial opportunities with a number of brands of technology and media partners, including The Walt Disney Company, The LEGO® Group, Penguin Books, Sesame Workshop, Apple, Amazon and Google
Financial effects of the Acquisition
The Acquisition is expected to be immediately earnings accretive, generate returns well above the cost of capital and whilst smaller in scale, deliver margins and cash generation approaching the levels of Team17.
This statement is not meant or intended to be a profit forecast and should not be interpreted to mean that the earnings per share of Team17 following completion of the Acquisition will necessarily be above or below the historical published earnings per share.
Debbie Bestwick MBE, CEO of Team17, commented:
“I am thrilled to be welcoming StoryToys into the Team17 family and believe our shared culture and values perfectly align. In StoryToys, we are acquiring a highly creative and successful team whose ability to both entertain and educate children is truly best in class.
“Their track record is without question but the depth of talent that exists within the business gives us an unrivalled position within a hugely exciting and high growth edutainment area.
“We look forward to working closely with the whole StoryToys team and are delighted to be able to not only support their ambitious growth prospects but to provide a strong and stable platform to accelerate their development. Team17 prides itself on its culture and on embracing ambitious management teams – today’s announcement is an example of how we intend to make that a reality.”
Emmet O’Neill, CEO of StoryToys, commented:
“Team17 is the perfect home for StoryToys as we enter into this incredible new chapter. Our goal is to be the number one provider of edutainment content for young children. Collaborating with Team17 will make that a faster and more exciting journey.
“We believe in creating the best possible digital learning experiences for children. We look forward to the possibilities that are opened up by collaborating with what we believe to be the best partner to deliver our ambitions.”
|Team17 Group plc
Debbie Bestwick MBE, Chief Executive Officer
Mark Crawford, Chief Financial Officer
|via Vigo Consulting
|GCA Altium (Nominated Adviser)
Adrian Reed / Paul Lines
|+44 (0)845 505 4343|
Chris Bowman / Toby Flaux / Marie Moy / Alix Mecklenburg-Solodkoff
|+44 (0)20 3207 7800|
|Vigo Consulting (Financial Public Relations)
Jeremy Garcia / Fiona Hetherington
|+44 (0)20 7390 0233|
About Team17 Group plc
Team17 Group plc is a global provider of games entertainment to a broad audience. It has two main verticals – a games entertainment label and creative partner for indie developers, and a leading developer of educational apps, targeting children under the age of eight.
Games label and creative partner
Team17 is a games entertainment label and creative partner for independent (“indie”) developers, focused on the premium, rather than free to play market, and creating games for the PC, console, mobile and tablet gaming markets.
Alongside developing the Company’s own games in house (“first party IP”), Team17 also partners with independent developers across the globe to add value to their games in all areas of development and production and in bringing them to market across multiple platforms for fixed percentage royalties (“third party IP”).
Since foundation in 1990, the Company has launched over 100 games, including the iconic Worms, Overcooked! and Escapists franchises, along with many more including; Yooka-Laylee, Yoku’s Island Express, My Time at Portia, Hell Let Loose, Blasphemous, Golf With Your Friends, Neon Abyss and Moving Out making Team17 one of the most prolific developers and diverse partners of games for the indie market.
Team17’s wholly owned subsidiary, StoryToys, is a leading developer and publisher of educational apps, targeting the pre-school market of children aged two to seven years old.
StoryToys apps have been downloaded over 100 million times across 120 countries, and its educational entertainment apps are produced in 28 different languages. StoryToys’ mission is to create apps for children that engage them in well-rounded activities designed to help them learn, play, and grow, with partners including The Walt Disney Company, The LEGO Group, Penguin Books, Sesame Workshop, Apple, Amazon and Google. www.storytoys.com
Visit www.team17.com for more information