# Sumo Group plc Acquire Red Kite Games Limited

- Link: https://www.directorstalkinterviews.com/sumo-group-plc-acquire-red-kite-games-limited/412766098
- Published: 2019-02-01T07:09:20+00:00
- Author: Giles Arbor

**Sumo Group plc** (LON: SUMO), the award-winning provider of creative and development
services to the video games and entertainment industries, has announced that yesterday
the Group completed the acquisition of Red Kite Games Limited, a work-for-hire studio
focusing on engineering and code support services, for a total consideration of 
circa £2.0 million. The net consideration is circa £1.5 million, as Red Kite has
been acquired with circa £0.5 million of cash on the balance sheet.

The acquisition supports the Group’s growth strategy through increased capacity 
and access to a new talent pool in West Yorkshire.

**Background**

Red Kite is well known to the Group: Sumo Digital has worked successfully with Red
Kite for several years, collaborating on a range of titles. Sumo Digital has in 
the last 12 months accounted for around 40% of Red Kite’s sales with the other 60%
coming from projects that are not publicly disclosed.

Established by ex-Rockstar Games developer Simon Iwaniszak in 2012, Red Kite is 
primarily a work-for-hire studio, providing game development services and code solutions
to the video games industry. The business operates from a single studio in Huddersfield,
West Yorkshire, employing 27 people. Its talented and highly experienced development
team works with some of the industry’s best-known publishers and developers, most
recently Codemasters on DiRT 4, Sony Computer Entertainment (SCE) on God of War 
III: Remastered and Activision on Call of Duty: Strike Team.

The share capital of Red Kite was owned by certain of its Directors and employees,
including the company’s founder Simon Iwaniszak.

**Integration**

Simon Iwaniszak, David Roberts and Andrew Greensmith, three of Red Kite’s former
shareholders, have entered into new service agreements and will be issued with options
over Sumo Group shares under the Company’s Long-Term Incentive Plan.

The business will continue to operate under the Red Kite name, as a wholly owned
subsidiary of Sumo Digital.

**Financials**

In the year ended 31 January 2018, Red Kite reported EBITDA of £0.4m on revenue 
of £0.9m. These figures are unaudited. Both revenue and profit are expected to be
lower in the year to 31 January 2019, due to the application of resource on an own-
IP project.

Red Kite is expected to contribute circa £0.2m to Sumo Group EBITDA in the 11 months
to 31 December 2019.

**Consideration and issue of equity**

Under the terms of the acquisition, Sumo Group has paid an amount in cash equal 
to the cash held by Red Kite at completion (circa £0.5m) and will issue 1,162,791
new ordinary shares in Sumo Group on the first anniversary of completion (the “Consideration
Shares”) to the sellers with a value of £1.5m, calculated using the average closing
share price for the three business days prior to completion of 129 pence.

The sellers have agreed that, for the period of 12 months from issue of the Consideration
Shares, any sale will be subject to the approval of Sumo Group’s brokers in order
to maintain an orderly market.

> **Carl Cavers, Chief Executive Officer of Sumo Group plc, said:**
> “Red Kite is an established brand with talented people, providing engineering 
> and code support services to some of the biggest names in the industry. Simon 
> and his team are already well known to us and we are confident that Red Kite will
> integrate quickly and successfully. On behalf of the whole Group, I extend a warm
> welcome.”
> **Simon Iwaniszak, Studio Director of Red Kite, added:**
> “We are very much looking forward to being part of Sumo Group. Sumo Digital is
> such an exciting business, working on incredible projects. Being part of a creative,
> ambitious and supportive Group, which is delivering great results, will present
> new opportunities and new challenges to Red Kite. We have exciting plans for the
> studio and believe that Sumo Group will help us to achieve our full potential.”

Share on: