Angry Birds join Sonic the Hedgehog as Sega agrees to buy Rovio Entertainment

Sega Sammy who are part of the Japanese consoles and gaming giant Sega, the company behind franchises such as Sonic the Hedgehog, have had an offer accepted by the Finnish games studio Rovio Entertainment to takeover their product.

Discussions have been on-going for some time but an agreement was reached at the weekend with Sega announcing that it sees the planned takeover as the perfect pathway to help them accelerate their growth in the global gaming market, recognising the importance of continuing to invest in their development and operating capabilities.

The deal for the makers of Angry Birds is valued at £625m (€706m or $776m) and is subject to shareholder and regulatory approval.

Fair share

The breakdown with regards to shares will see Sega paying 9.25 euros per share and 1.48 euros per share option, for the mobile-first gaming company. From a business finance perspective, it represents a 63% premium to the €5.67 price at which share trading on the Helsinki stock market was suspended back in January, which was when the first murmourings of a bid began to emerge.

Upwardly “mobile”

Rovio’s portfolio is very impressive. They described themselves as a firm that develops and publishes mobile games, as well as licensing the hugely profitable Angry Birds brand and its products, animations and films. They have previously claimed that their 2016 The Angry Birds Movie, coupled with its sequel released three years later, have been downloaded a staggering five billion times.

Expansion aiming to increase fanbases

Sega have identified three specific areas where there can be synergy and collaboration between the two operators.

These are cross-platform expansion of Rovio’s IP using Sega Corporation’s capabilities; the utilization of the Finnish company’s know-how in the live service mobile game operation – including the highly respected Beacon platform – to enable Sega’s current and new titles to be brought to the global mobile gaming market; and a quick-fire increase to the fanbase of each of the businesses.

Promises made to existing workforce

The acquisition has been carefully considered with the obvious aim of applying the expertise at Rovio to Sega’s existing game IP’s, with the vision of increasing its corporate value.

Naturally there will be anxiety amongst the workforce at Rovio, but in documents released to the public domain there was an indication that the takeover is not expected to have any “near-term” impact on their current operations, assets, employees, or indeed their existing management team.

They will also remain at their Finland base, although Sega will be making their own appointments to the board of directors, but that would be expected and anything less would seem slightly odd.

Unanimous recommendation

From Rovio’s point of view, it was seemingly a unanimous decision by their current board of directors to recommend wholeheartedly, that the shareholders and the option holders of the company, accept the offer put to them.

They announced that further information regarding the deal itself would be published in the early part of May, but they did divulge that the expectation is for the transaction to be completed in the third quarter of this year.

Exciting future ahead

The CEO, Alexandre Pelletier-Normand, admitted that as a youngster he grew up playing Sonic the Hedgehog and said at the time he was “captivated” by its state-of-the-art design. He called him an iconic and globally recognisable character, and was thrilled that with the combining of the two “remarkably complementary companies” – which have proved to have a worldwide reach spanning mobile, PC/console, and beyond – there now is opportunity to take the unquestionable strengths of each business to create an incredibly exciting future.

He spoke of how with the onset of Angry Birds he became aware of just how gaming had evolved into a “true mainstream phenomenon”, with the power to “shape modern culture.” He said that the mission now is to “craft joy” by continuing to bring Ravio’s expertise and tools to the next level of development, enhancing and expanding their own and Sega’s vibrant IP’s.

Ravio not “angry” any more but still seeing “red”

Of course Angry Birds, which became an instant smash hit when it was released back in 2009, has now been renamed as Red’s First Flight on the Apple Store, since February 2023. The developer said at the time that they made the decision to delist and rename the popular game because of the “wider impact” it was having on the rest of their portfolio.

They explained that they had come to realise that many people were buying the “buy-once-play-forever” game for a dollar, but were actually shying away from its successors like: Angry Birds 2, Angry Birds Friends, and Angry Birds journey. The free to download follow-up games are splintered with “microtransactions” set within the gameplay, designed specifically to provide more lucrative income streams. It will be interesting to see just how the concept evoloves from this point moving forward.

Long term goal in sight

Sega Sammy’s president and CEO, Haruki Satomi, said that the company constantly monitors the global gaming market and it was totally obvious that the mobile sector was growing extremely rapidly and therefore offered up enormously “high potential”, and as a consequence, influenced their thinking in what had become the “long-term goal” of Sega, which is to expand in that particular field.

In a brief announcement he added: “I feel blessed to be able to announce such a transaction with Rovio, the company that owns Angry Birds which is loved across the world, and is home to many skilled employees that support their industry leading mobile game development, and demonstrate brilliantly their operating capabilities.”

Bright future?

The early signs are promising, although these “friendly” takeovers do not always run as smoothly as early statements suggest. So as with all business dealings, it will be a case of keep watching for future developments.