Modern Times Group, a Stockholm-based digital entertainment company, announced that it is doing a strategic review of its gaming portfolio, and it said it will explore listing as a public company in the U.S.
MTG said it is doing the “strategic review of its gaming vertical in order to evaluate the best route to crystalize value for shareholders.” The strategic review could result in a joint venture partnership for the gaming vertical to enhance its competitive position or that MTG fully transitions to become a global pure-play esports company. MTG was one of the most active game investors in the past year. It invested $11 million in seven game and esports startups in the first half of 2019.
Within the context of the strategic review, MTG (the parent company of esports event firms Dreamhack and ESL) will explore an additional listing in the U.S., which has become one of the biggest esports markets in the world.
MTG’s acquisition of InnoGames, a German mobile game company, has created value for the firm. Since the split, MTG has been approached with a range of different alternatives for the company to become even more competitive. As a result, the company has decided to initiate a strategic review. In its third-quarter earnings report, MTG said that esports revenues were up 12%.
“We have the opportunity to establish MTG as a global leader in the esport industry and we will accelerate value creation by further combining and extracting synergies in our ownership of the two strongest esport brands globally, aided by our solid financial position and commercial operational expertise,” said MTG CEO Jørgen Madsen Lindemann.
After the strategic review is completed, MTG intends to assess its financial principles and cash requirements going forward in accordance with the company strategy of growing organically and through acquisitions. The outcome of the review could lead to a potential redistribution of any excess cash to its shareholders.
Independent and in parallel to these processes, MTG will consider implementing an operational efficiency program to ensure a “right-sized and more efficient headquarters organization.” I interpret that as meaning the company is evaluating whether it will lay off workers. MTG has 35 employees.
The company expects annual savings amounts to around Swedish krona million ($5.1 million), approximately 75 % being realized in 2020 and the remainder in 2021. The normalized targeted run rate for central operations cost will be approximately SEK 100 million per year.
Before a final decision on the operational efficiency program is taken, MTG will enter into a period of consultation with employee organizations. This is planned to take place during November.