Keywords Studios acquires British games developer Coconut Lizard

Video games company Keywords Studios acquired game development services outfit Coconut Lizard on Friday for a total of £2m.

Keywords snapped up the Gateshead-based business as part of its efforts to become the "go-to" technical and creative services platform for the global video games industry.

In addition to expanding the group's game development services, Keywords said the acquisition also gave it "strong access to game development talent".

Keywords will pay a non-contingent consideration of £1.35m, made of £990,000 in cash and the issue of 19,739 new ordinary shares to sellers Robert Troughton and members of CL's wider team on the first anniversary of completion. The remaining consideration of up to £650,000 will become payable to the sellers, in a mixture of cash and shares, based upon performance targets for Coconut Lizard over the first 12 months post-completion.

The AIM-listed group highlighted that Coconut Lizard generated revenues of over £1.5m and adjusted underlying earnings of £350,000 in the year ended 31 March.

Chief executive Andrew Day said: "Having recently successfully raised £100m in a placing, we are pleased to have completed our first acquisition despite the Covid-19 pandemic.

"We expect to complete further acquisitions over the months ahead from the strong and attractive pipeline of opportunities that we are currently reviewing."

As of 0940 BST, Keywords shares were up 1.59% at 1,831p.