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(Alliance News) - Team17 Group PLC on Friday said it has agreed to buy kids app-maker StoryToys, for an initial USD26.5 million in cash, via the acquisition of its parent-company TouchPress Inc.
The Wakefield, England-based video game developer and publisher said it will pay up to a further USD22.5 million in cash based on targets to be delivered by StoryToys within three years of the purchase. The acquisition will be funded from Team17's existing cash resources, it said.
Shares in Team17 were trading up 4.1% at 760.00 pence each in London on Friday morning after the purchase was announced.
Dublin-based StoryToys is an developer and publisher of edutainment apps for children with over 100 million downloads to date, Team17 noted.
Team17 said the acquisition will widen its audience and allow it to take advantage of the growing demand for children's education apps - accelerated by home education during the pandemic - by adding this complimentary "edutainment vertical".
The game developer anticipates ongoing growth for the education app market, noting Technavio's prediction that the sector will grow by more than USD46 billion from 2020 to 2024, with a compound annual growth rate of 26%.
In the short term, the company said it expects StoryToys to generate immediate earnings and returns well above the cost of capital, with cash generation approaching the level of Team17, despite its smaller size.
Besides connecting Team17 with StoryToys creative, technical and marketing teams, the acquisition also provides links with a range of leading children's brands and media partners, including The Lego Group, The Walt Disney Co, Warner Bros, US Hasbro Inc, Penguin Random House, Apple Inc, Amazon.com Inc and Google LLC.
Chief Executive of Team17, Debbie Bestwick, said: "[StoryToys] 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."
By Scarlett Butler; scarlettbutler@alliancenews.com
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